Market Value Evaporates 2/3 And Layoffs The Fashion Electric Business Originator How?

ASOS PLC (ASC.L) shares plunged 23.2% again after its 40% plunge in mid December last year, because the British fashion dealer released third profit warning during this period.

When ASOS PLC released its three quarter results today, it said the pre tax profits in fiscal year 2019 will drop by 71% to 30 million pounds compared with the same period last year, and it is estimated that gross retail interest rates will drop by 250 basis points.

Management once again blamed the failure of the US and European warehouses to complete the upgrading of infrastructure and technology in a timely manner, directly affecting the inventory, sales and cost base of the two major regional markets.

The specific problem of Atlanta warehouse is that the US authorities require the third party brands to enter the us to provide information on clothing chemical products. Suppliers also need to submit additional producer information, which seriously affects the speed of local product supply. The EuroHub warehouse in Berlin, Germany, is unable to cope with the return scale and other shipments after installing the new automation system.

In the first four months of June 30th (the three quarter), retail sales of fixed exchange rates in Europe and the United States increased by only 3% and 6% respectively, while the growth rate in the UK market and other parts of the world increased by 16%.

Nick Beighton, chief executive, stressed that the unaffected areas maintained strong growth, pushing the number of active users for the first time to exceed 20 million. However, ASOS PLC further reduced its annual sales growth forecast from 15% in December to 11%, which is the first ten months of the fiscal year, and the initial estimate was 20%-25% after the end of last fiscal year.

The latest pre tax profit outlook is 3000-3500 pounds, far less than the market expected 55 million 900 thousand pounds and 102 million pounds in the last fiscal year. The warehouse problem is expected to generate a transitional cost of 47 million pounds, with a restructuring cost of 3 million 500 thousand pounds. Due to a backlog of earnings, management raised the net debt guidelines at the end of 31 in August to 50 million pounds from 100 million.

Nick Beighton expects warehouse problems to end in September of this year. Shore Capital and Peel Hunt analysts have criticized ASOS PLC for its own dilemma.

Liberum analyst Wayne Brown pointed out that in the past four years, the group has invested 700 million pounds in warehousing and distribution. Although sales doubled, profitability has not improved. The expected profit in the current fiscal year is 20 million lower than in 2015.

RBC plus Huang capital market analyst continues to sing well the development potential of ASOS PLC, and points out that as long as the penetration rate of asos.com in Europe and the United States reaches 1/3 in the UK, the overall sales in the next ten years are expected to increase by two times.

Nick Beighton also pointed out at today's conference call that the current twists and turns did not change the fact that the group had huge opportunities. He admitted "failure in implementation", but stressed at the same time that "I am very clear that this is not a demand problem".

In the three quarter, ASOS PLC realized revenue of 919 million 800 thousand pounds, up 11.6% from 823 million 900 thousand a year ago. After excluding the exchange rate, it gained 11%, and total orders increased by 14% to 24 million 800 thousand per annualized year.

ASOS PLC (ASC.L) closed on Thursday with the lowest 2107 pence in the day, down 23.2% and the market value evaporated more than 500 million pounds. Peel Hunt analyst has downgraded its rating from "buying" to "holding".

Today's slump has widened the stock's decline in the past 12 months to 65.3%, while its main competitors Boohoo Group PLC (BOO.L) and Zalando SE (ZALG.DE) increased by 0.6% and 15.5% respectively.

ASOS PLC now has a market value of about 1 billion 770 million pounds, while the Marks and Spencer Group PLC (MKS.L) Marsha general store, which was once surpassed by the biggest British fashion supplier, maintained its market value of 4 billion.

Before the end of 2018, the ASOS PLC (ASC.L) rose more than 56% after taking office in early September of Nick Beighton2015. Nick Bubb, an independent retail analyst, believes that the credibility of the management sector is heating up. He believes that investors will wait and see the performance of this holiday season before deciding whether to step down.