Asos set for sales jump as investors eye turnaround after profit warnings

Asos investors are expected to cheer surging revenue as the online retailer looks to bounce back from a string of profit warnings.

Investors in the retailer have had a reality check over the past 12 months, watching shares in slide by more than 50%.

The company plunged in value after it warned on profits in December 2018 and July 2019, as it failed to live up to lofty expectations.

However, the company is still expected to post double-figure sales growth in its full-year results announcement on Wednesday October 16 as customers continue to spend online in favour of the high street.

Analysts have forecast that Asos will report a 12% jump in revenues to £2.7 billion for the year to August.

For the new financial year, analysts are forecasting 15% sales growth to reach £3.1 billion for the year.

The retailer has forecast that it will post a pre-tax profit of between £30 million and £35 million, after around £50 million in restructuring and transition costs.

It is expected to deliver a significant decline on profits from last year, when it delivered a pre-tax profit of £102 million.

Asos warned over profits in July after it said it had struggled in getting its Berlin and Atalanta factories up to full speed.

The company has also said profits have been impacted by substantial investments in IT, operational issues at warehouses in the US and UK, stock availability problems and the impact of economic uncertainty on consumer confidence.

While the company is still set to post significant sales growth, it has seen its market value fall behind rapidly-growing rival Boohoo for the first time.

Greg Lawless, analyst at Shore Capital, said: “Following two profit warnings full-year 2019 has been a difficult year for the company with operational issues causing a collapse in the operating margin.

“In our view, management must rebuild credibility in its financial guidance and show a clear path that it can recover operating margins over the medium term.

“In our view, there is no guarantee that the operational issues that the company has encountered in both Berlin and Atlanta will be fully resolved ahead of peak trading.”

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