Curse of Asos strikes again as earnings expectations and share price decline | Nils Pratley

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So much for the idea that closed shopping habits have permanently pushed the profits of online professionals into the new stratosphere. Asos says, after a knockout year of £194m in pre-exceptional profit, it will drop to £110m – £140m next, notches below City’s expectations.

Nick Payton, CEO, is out. And the share price, which is down 13% to £24.08 on Monday, is standing at less than half its level at the start of this year, which was a moment when Asos apparently demonstrated the brigade’s victory online by collecting bios leftovers. The Empire of Philip Green.

But there’s also something familiar in this story to long-term Asos watchers: every time the share price hits £60, it halves within 12 months. It’s happened three times now. The first was in 2014 when the concern was profit margins. Then, in 2018, the problem was that there were problems with the new warehouses in Atlanta and Berlin. Now, if someone allows a little digital misinformation (peak in March was £59.95), the curse is back again.

The Last False Dawn has more than one element but perhaps the biggest is disappointment abroad. For all the capital invested in the European Union and the United States, “the world’s leading fashion destination for young people in their 20s,” as Asos describes itself, is still formidable only in its home country. Last year’s revenue growth rate in the UK (36%) easily exceeded that of the younger markets of the European Union (18%) and the US (15%).

Beighton’s exit appears to be related. When a company says it wants to be a “really” global retailer, you know that it thinks it lacks a few vital gears. Highly rated German group Zalando sets speed in the EU and Asos has not repeated the UK marketing hype in the US. Note the appointment of a former non-executive at Zalando, Jürgen Lindemann, to the same board role at Asos. It seems to be an acknowledgment of the need to learn lessons from the outside.

Under these circumstances, the process of changing the boardroom makes sense, but the story of Asos suddenly appears to be more complex than ever. The company has yet to prove that Topshop, Topman, and Miss Selfridge can enjoy a profitable second life online. Besides international rejig, it is also trying to develop a third-party execution platform operation, with Next operating in the UK. This is a long list of big projects, and it won’t be overseen by President Adam Crozier, who will leave BT at a bad moment.

Asos is still an impressive creation, but it’s frustrating. The current stock price was first seen remarkably in 2011. A decade later, the amount of potential gold for global success looks greater than ever, but execution is the hard part. Asus never makes it look easy.

There is no easy solution to the turmoil of the Treasury and Quasi-Quarting

Despite Downing Street’s attempts to de-escalate tensions, the major rift between the Treasury and Business Secretary Kwasi Quarting over the energy crisis is unlikely to be resolved quickly. Get ready for blasts during the winter.

In the Treasury’s view, the sheer amount of “essential” industries wanting support to combat rising energy prices should seem daunting. Under the Intensive Energy Users Group banner, the group covers steel, chemicals, fertilizers, paper, glass, cement, lime, ceramics and industrial gases. This is a great assortment. The trade body says its members support 200,000 UK jobs directly and 800,000 indirectly.

That’s big enough to get attention, but where does the hard-pressed chancellor, bravely trying to stick to his plan at the conference that “accumulating debt is immoral,” supposedly draw the line?

Someone suspects that Rishi Sunak will eventually give up the land – and perhaps Steel has the strongest claim now that Kwarteng has found a new CF-fertilizer adhesive plaster solution to secure CO2 suppliers. But the biggest drawback will be the broader support duration. Market prices indicate that energy will be expensive until next spring. There is no easy solution – certainly not a cheap one.

Bank language seems to be preparing for a rate hike

Andrew Bailey, governor of the Bank of England, is “worried” about inflation exceeding the target. Michael Saunders, who is in charge of setting interest rates, believes it is “appropriate” for financial markets to move toward raising interest rates “much earlier” than previously.

The language, as ever, is loose enough to allow for all possible outcomes when the Bank’s Monetary Policy Committee meets in November and December. But this really does feel like a warm-up exercise. The good news – for borrowers – is that any move from 0.1% to 0.25% cannot be described as dramatic. But 2022 seems to be an interesting year all of a sudden.

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