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Analysts anticipate slump in interim profits at ASOS

Lauretta Roberts
07 April 2019

Analysts are anticipating a slump in interim profits ASOS after the e-commerce giant warned it was clamping down on serial returners.

The London-based business which positions itself as the destination for fashion-obsessed 20-somethings is expected to post pre-tax profits of just £3.2m on Wednesday when it updates the market on its half-year performance.

This would compare to a profits of £30m for the same period in the prior year.

ASOS caused shockwaves in the market before Christmas when it announced sales growth had slowed to around +15% (lowly by its own previously high standards) and warned on profits.

The business had a lack lustre Black Friday in November and the bedding in of its new warehouse facility in Atlanta had held back US growth.

Sales growth is still expected to be around 13% for the half year, which is a significant outperformance of the market, but the slim margins will be a cause for concern.

In an attempt to reduce costs ASOS has warned customers who are serial returners that they risk having their accounts deactivated. Given its strong fashion credentials, the etailer is susceptible to young consumers buying goods, wearing them for the social media opportunity (some influencers are believed to buy clothes that are worn only for a moment to be used on Instagram posts) and then returning them.

ASOS emailed all its customers last week to say that while it would be extending its returns policy (items can be returned up to 45 days after purchase with a cash refund up to 28 days and store credit thereafter), it would also be policing users' activity and clamping down on those who abuse the system.

Read the ASOS company profile with in-depth data, company history and news archive on our master database of fashion, The Intelligence.

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