ASOS Shares Plummet Amidst Shein Competition and Soft Consumer Demand
ASOS, the British online fashion retailer, has seen its stock prices plummet in recent years, largely due to the competition posed by Chinese fast-fashion retailer Shein. The company has also issued a profit warning, with shares falling sharply following the announcement.
ASOS expects its full-year earnings to be at the lower end of the £130 million to £150 million forecast range. This is due to a 'soft consumer backdrop', which has led to total sales for the year falling below analyst expectations. The company has attributed this to a challenging retail environment, with consumers tightening their belts in the face of rising inflation and cost of living increases.
ASOS has been in the process of turning its business around, having entered the final stage of a turnaround plan launched last year. The company has 'permanently' slashed costs and improved profitability as part of this plan. Despite these efforts, ASOS shares are down almost 40% in the past year and over 90% from their Covid-19 peak. The intense competition from Shein, known for its extremely low prices, has also contributed to ASOS's declining market share and stock prices.
ASOS has completed its turnaround plan, but the company continues to face significant challenges in the form of a soft consumer backdrop and intense competition from fast-fashion retailers like Shein. The company's shares have taken a hit as a result, with investors awaiting signs of recovery.
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