Investors are on tenterhooks as Asos becomes the latest high-profile fashion brand to report results next week.
The slump in the retail sector has been driven by the cost of living crisis hitting cash-strapped shoppers, with rising inflation and interest rates hurting people’s pockets.
Asos faces a stern test to convince the City that it is on the right course with its full-year results on Wednesday after the likes of fellow fashion firms Boohoo and Next issued bleak guidance on profit last month.
The company revealed in a trading update in September that its profits would be at the bottom end of its guidance.
But more concerning was that it warned over weak sales in August after a positive June and July. Asos put this down to consumers tightening their belts and a sluggish start to autumn and winter shopping.
As a result the company downgraded its annual growth forecast to 2 per cent, from the 4 per cent to 7 per cent indications it issued in June.
Asos also anticipates it will end the year with around £150m of debt, far exceeding its range of £75m to £125m.
The only hope is that a rise in the dividend payment can soothe investors’ fears.
One look at the shares, down 77 per cent this year, demonstrates the challenge at hand.
HSBC retail analyst Paul Rossington said: ‘We expect uncertainty over the demand outlook to dictate share price performance. We are also concerned about the impact of increased competition in international markets, particularly in Europe.’
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