Asos Shares Destroyed By 'Unprecedented' Level Of Discounting

British fashion retailer Asos PLC/ADR ASOMY shares are down 44 percent since Friday after the company released a profit warning.

Asos CEO Nick Beighton said the drop is due to an staggering amount of discounting items, according to The Guardian. 

“In fashion we are seeing an unprecedented level of discounting, certainly something I have not seen before, and that’s across the board.” 

Beighton reportedly said that November was a very material month for Asos from both a sales and cash margin perspective, and that it fell significantly behind expectations.

The CEO said the company misjudged Black Friday by offering discounts that fell short of its competitors.

“The current backdrop of economic uncertainty across many of our major markets together with a weakening in consumer confidence has led to the weakest growth in online clothing sales in recent years,” he said in a trading update.

Company Problem Or Sectorwide Weakness? 

Sports Direct International PLC ADR SDISY CEO Mike Ashley also reiterated how difficult November was for retail.

“November was the worst on record, unbelievably bad,” Ashley said, according to The Guardian. “No one could have budgeted for that. Retailers just cannot take that kind of November. It will literally smash them to pieces.”

The news rattled the industry, but it remains to be seen whether the drop is indicative of the health of the retail sector or representative of Asos’ questionable merchandising.

Twitter Inc TWTR users were quick to point out how Asos may have lost touch with its audience after conducting a quick search of its menswear offerings.

Let’s be honest, ASOS is suffering because of the awful crap for sale on their website at daft prices. Who is their demographic anymore? It’s certainly not the average man on the street - here are four choice pieces that were first to find pic.twitter.com/n22WR1pNTs

— Jamesy (@jamesydraws) December 17, 2018

ASOS: why is no one buying our stuff
Also ASOS: pic.twitter.com/c4H0VPipgX

— Kat Haylock (@kat_haylock) December 17, 2018

Matt Powell of NPD Group told Benzinga that the sneaker market is the most promotional it has ever been, driven by brands’ direct-to-consumer businesses.

"Brands are discounting to drive sales. And retailers must respond,” Powell said.

Over-the-counter Asos shares were down 6.61 percent at $27 at the time of publication Thursday. 

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