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Shares in the online fashion retailers ASOS and Boohoo have taken sharp dives after both revealed cost of living-related pain to the market.
ASOS said it would miss profit forecasts after seeing a significant rise in product returns because inflationary pressure was now impacting its twenty-something customers.
It had previously said, in April, that it was yet to notice any hit from the cost of living crisis on consumer behaviour.
The company, which has been without a chief executive since the abrupt resignation of Nick Beighton last autumn, said it expected revenue to grow by 4% to 7% in the financial year to the end of August.
Adjusted pre-tax profit was seen coming in between £20m-£60m.
Analysts had expected a figure of £83m, according to a consensus compiled by Refinitiv.
Chief Operating Officer Mat Dunn said: “What is now clear, based on the significant increase in returns rates that we have seen, is that this inflationary pressure is increasingly impacting our customers shopping behaviour.”
He added that it was too early to know how long this would continue.
ASOS said it had appointed Jose Antonio Ramos Calamonte, currently chief commercial officer, as chief executive.
He told a call with financial analysts that the spike in returns across the group was not limited to any single brand, product type or payment method.
“We know that the sharp increase in return rates during the period happened at the same time that consumers started to feel the pinch,” he explained.
“For example, in the UK, we saw a sharp increase in return rates coinciding with increases in National Insurance contributions and increased energy, food and fuel prices.”
Shares plunged by more than 20% in response to the company’s update, with values slumping to their lowest level since 2010.
Boohoo stock also fell, by more than 12%, after its own trading report.
It revealed the extent of a previously-flagged fall in sales, with revenue down 8% to £445.7m over the three months to May.
Boohoo said it reflected a tough comparison with the same period last year when sales got a pandemic boost and, like ASOS, product returns but it maintained its guidance for the full year.
The group, which sells clothing, shoes, accessories and beauty products aimed at 16 to 40-year olds, added it was expecting sales to pick up as the summer season evolved.
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