Asos Shares Tumble After Reporting Sales Short of Expectations

Tuesday 30 September 2025 9:01 am

Shares in e-commerce fashion firm Asos have tumbled after the company reported sales short of expectations and vowed to extend its cost-cutting programme in a bid to secure “even stronger profitability foundations”.

The London-based business said it “had planned to shift gears” from rebuilding its commercial model towards “re-engaging with customers.”

“Instead, more opportunity to reduce fixed costs and drive further variable cost optimisation were explored and the business focus remained on securing even stronger profitability foundations that will deliver further material improvements to ASOS’ cost base in FY26 and beyond,” Asos said.

Asos reported “lower than expected” gross merchandise volume, a measure of the value of goods sold, while group turnover was below market estimates.

However, the firm’s profit margins were up by 350 basis points as it “continues to focus on higher quality sales against a soft consumer backdrop.”

Stock Slump

The stock was down 11 per cent to 261p shortly after 8am on Tuesday morning. It has sunk more than 40 per cent since the start of the year.

“Demonstrating relevance and growth will be key to investor sentiment,” Peel Hunt analysts said, adding that their own estimates projected company turnover would be down 12 per cent year on year, below the bottom of the range guided.

The company’s pre-tax earnings guidance at the lower end of its £130-150m guided range represented a 10 per cent downgrade to market expectations.

Asos said its cost-cutting measures included renegotiating supplier contracts, mothballing one of its fulfilment centres and taking “a more targeted approach” to customer acquisition.

“Together, these changes establish a structurally higher gross margin profile and stronger, more profitable underlying economic model that Asos can grow in a sustainable fashion,” Asos said.

What Led to the Stock Slump?

The main reason for the stock slump is the company’s reported sales being short of expectations. Asos had planned to shift its focus from rebuilding its commercial model to re-engaging with customers, but instead, it explored more opportunities to reduce fixed costs and drive further variable cost optimisation.

This change in focus led to a decrease in the company’s gross merchandise volume and group turnover, which were below market estimates. Although the firm’s profit margins were up by 350 basis points, it was not enough to offset the decline in sales.

Cost-Cutting Measures

Asos has implemented several cost-cutting measures to secure stronger profitability foundations. These measures include renegotiating supplier contracts, mothballing one of its fulfilment centres, and taking a more targeted approach to customer acquisition.

By renegotiating supplier contracts, Asos aims to reduce its costs and improve its profit margins. Mothballing one of its fulfilment centres will also help the company reduce its costs and focus on more efficient operations.

Taking a more targeted approach to customer acquisition will enable Asos to focus on high-quality sales and reduce its marketing costs. These changes will establish a structurally higher gross margin profile and a stronger, more profitable underlying economic model.

Impact on Investors

The stock slump has had a significant impact on investors. The company’s pre-tax earnings guidance at the lower end of its £130-150m guided range represented a 10 per cent downgrade to market expectations.

Peel Hunt analysts stated that demonstrating relevance and growth will be key to investor sentiment. The company’s ability to show relevance and growth will be crucial in restoring investor confidence and improving its stock price.

Conclusion

In conclusion, Asos’ shares have tumbled due to the company’s reported sales being short of expectations. The company has implemented cost-cutting measures to secure stronger profitability foundations, but these measures may not be enough to offset the decline in sales.

Asos needs to demonstrate relevance and growth to restore investor confidence and improve its stock price. The company’s ability to focus on high-quality sales and reduce its costs will be crucial in establishing a structurally higher gross margin profile and a stronger, more profitable underlying economic model.

Frequently Asked Questions

Q: What led to the stock slump in Asos?

A: The main reason for the stock slump is the company’s reported sales being short of expectations.

Q: What cost-cutting measures has Asos implemented?

A: Asos has implemented several cost-cutting measures, including renegotiating supplier contracts, mothballing one of its fulfilment centres, and taking a more targeted approach to customer acquisition.

Q: How will the cost-cutting measures affect the company’s profitability?

A: The cost-cutting measures will establish a structurally higher gross margin profile and a stronger, more profitable underlying economic model.

Q: What is the impact of the stock slump on investors?

A: The stock slump has had a significant impact on investors, with the company’s pre-tax earnings guidance at the lower end of its £130-150m guided range representing a 10 per cent downgrade to market expectations.

Q: How can Asos restore investor confidence?

A: Asos needs to demonstrate relevance and growth to restore investor confidence and improve its stock price.