Shares in Asos plunged by a quarter on Thursday after the out-of-fashion retailer issued its third profit warning in just eight months.
The online operator is dealing with chaos at its warehouses and is in the midst of an IT overhaul.
Chief executive Nick Beighton admitted: “Embedding the change from the major overhaul of infrastructure and technology in our US and European warehouses has taken longer than we had anticipated, impacting our stock availability, sales and cost base in these regions.”
Profits for the year will be no more than £35 million, compared with £102 million last time. The City was expecting profits of £55 million until now.
Beighton says the warehouses transition is more expensive than thought, but insists this is a “short-term” problem.
The shares tumbled 25% at first, but recovered some ground. They were off 14% at 2365p, which leaves Asos valued at £1.95 billion. That’s £600 million less than upstart rival Boohoo, which has grabbed market share.
Beighton added: “We are clear on the root causes of the operational challenges we have had, are making progress on resolving them, and now expect to complete these projects by the end of September.”
Asos’s status as a stock-market darling was already dented by profit warnings in December and March.
City analysts are watching it closely for signs that the strife on the high street is transferring to online retailers as consumers tighten spending. Nicholas Hyett at Hargreaves Lansdown, said: “Asos can be a bit of a Cinderella stock, struggling against the odds and still making it to the ball in the end.
“Growing pains have been a consistent problem at Asos over some years and this quarter is no exception. Not having stock available is a massive faux pas for a retailer and the cost of resolving the problems will eat into profits.”
