ASOS share price: what’s the outlook as suppliers squeezed to cut costs

The online fashion retailer has told suppliers that it requires a 3% discount on items it buys from them to drive cost savings and improve its balance sheet.

ASOS has reached out to its suppliers to request a 3% discount on clothes and accessories it buys from them to help reduce costs and help strengthen its balance sheet after issuing two profit warnings.

In a letter, first reported by trade publication Drapers, the online fashion retailer told its suppliers that it required a discount from them to help offset ‘transformational investments’ it has made in the US and Germany, where it opened large warehouses.

‘We have recently reviewed the current status of our supplier arrangements, also taking into account the significant investments we have made over the last few years and will continue to make, to lay the foundations for future growth,’ ASOS wrote. ‘We have set our sights on becoming one of the few companies with truly global scale in the market and we are confident that we will achieve this.

‘Our future growth aspirations not only benefit us but also benefit you, our valued partner. We hope you will understand this necessary change and on behalf of Asos we would like to thank you for your continued support.’

Practice trading ASOS and other retail stocks with an IG demo account

ASOS share down 40% since April

Since hitting a year-to-date high of £40.66 a share in late-April, the stock has fallen more than 40%, with it trading at £24.36 as of 11:35 GMT on Friday.

The online fashion retailer has seen its share price tumble after issuing its second profit warning in seven months back in July, with its CEO Nick Beighton forced to tell shareholders that the company expects to make profits of £30 million to £35 million this year as a result.

‘The major overhaul of our infrastructure has been bumpier and taken a lot longer than we originally anticipated,’ Beighton said. ‘We acknowledge that this is a failure in execution.’

City analysts had initially forecast ASOS to generate profit of £55 million this financial year, with the retailer recording profit of £102 million in 2018.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.