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UK's ASOS Sinks to First-half Loss

A model presents the latest creations from the Dior pre-fall 2024 women’s collection at the Brooklyn Museum in New York City, New York, US, April 15, 2024. REUTERS/Caitlin Ochs
A model presents the latest creations from the Dior pre-fall 2024 women’s collection at the Brooklyn Museum in New York City, New York, US, April 15, 2024. REUTERS/Caitlin Ochs
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UK's ASOS Sinks to First-half Loss

A model presents the latest creations from the Dior pre-fall 2024 women’s collection at the Brooklyn Museum in New York City, New York, US, April 15, 2024. REUTERS/Caitlin Ochs
A model presents the latest creations from the Dior pre-fall 2024 women’s collection at the Brooklyn Museum in New York City, New York, US, April 15, 2024. REUTERS/Caitlin Ochs

British online fashion retailer ASOS sunk to a first-half loss, as it battles competition from Chinese giant Shein and self-inflicted problems from excess stock, but it said it still expected an improvement over the year.
ASOS also named former Sainsburys and Amazon executive Dave Murray as its new chief financial officer on Wednesday, saying that his retail and e-commerce experience would help return the group to profitability, Reuters reported.
The company has struggled to grow since the pandemic and has cast its current financial year as a transition period, when it will speed up new collection launches and shed a build up of excess stock which has dragged on profits.
For the 26 weeks to March 3, ASOS posted an adjusted EBITDA loss of 16.3 million pounds ($20.3 million), compared to the 4.6 million pounds it made in the period last year.
Over the full-year period, it is sticking to a forecast for positive adjusted EBITDA on sales that are expected to be 5 to 15% lower.
"ASOS is becoming a faster and more agile business, and we are reiterating our guidance for the full year as we lay the foundations for sustainably profitable growth in full-year 2025 and beyond," CEO José Antonio Ramos Calamonte said.
ASOS is facing growing competition from fast-fashion giant Shein, which is expanding rapidly in Europe, offering low prices and benefiting from its speedy response to changing trends.

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LVMH Shares Drop after Missing Second-quarter Estimates

A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights
A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights
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LVMH Shares Drop after Missing Second-quarter Estimates

A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights
A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights

Shares in LVMH (LVMH.PA) fell as much as 6.5% in early Wednesday trade and were on track for their biggest one-day drop since October 2023 after second-quarter sales growth at the French luxury goods giant missed analysts' consensus estimate.

The world's biggest luxury group said late Tuesday its quarterly sales rose 1% year on year to 20.98 billion euros ($22.76 billion), undershooting the 21.6 billion expected on average by analysts polled by LSEG.

At 1000 GMT, LVMH's shares were down 4.5%.

The earnings miss weighed on other luxury stocks, with Hermes (HRMS.PA), down around 2% and Kering (PRTP.PA), off 3%.

Kering is scheduled to report second-quarter sales after the market close and Hermes reports on Thursday, Reuters reported.

Jittery investors are looking for evidence that the industry will pick up from a recent slowdown, as inflation-hit shoppers hold off from splashing out on designer fashion.

JPMorgan analyst Chiara Battistini cut full year profit forecasts by 2-3% for the group, citing softer trends at LVMH's fashion and leather goods division, home to Louis Vuitton and Dior.

"The soft print is likely to add to ongoing investors’ concerns on the sector more broadly in our view, confirming that even best-in-class players like LVMH cannot be immune from the challenging backdrop," said Battistini in a note to clients.

The weakness of the yen, which has prompted a flood of Chinese shoppers to Japan seeking bargains on luxury goods, added pressure to margins, another source of concern.

Equita cut 2024 sales estimates for LVMH by 3% - attributing 1% to currency fluctuations - and lowered its second half organic sales estimate to 7% growth from 10% growth previously.

The lack of visibility for the second half beyond the easing of comparative figures - as the Chinese post-pandemic lockdown bounce tapered off a year ago - is unlikely to improve investor sentiment to the luxury sector, Citi analyst Thomas Chauvet said in an email to clients.

"No miracle with the luxury bellwether; sector likely to remain out of favour," he wrote.

Jefferies analysts said the miss came as investors eye Chinese shoppers for their potential to "resume their pre-COVID role as the locomotive of industry growth and debate when Western consumers will have fully digested their COVID overspend".

LVMH shares have been volatile since the luxury slowdown emerged, and are down about 20% over the past year, with middle-class shoppers in China, the world's No. 2 economy, a key focus as they rein in purchases at home amid a property slump and job insecurity.

LVMH offered some reassurance, with finance chief Jean-Jacques Guiony telling analysts during a call on Tuesday that Chinese customers were "holding up quite well," while business with US and European customers was "slightly better".