Asos has warned that full-year profits are set to be towards the bottom end of guidance after weaker-than-anticipated summer sales.

The online fashion retailer, which has struggled in recent times with sliding demand, anticipates underlying earnings of £40million to £60million for the 53 weeks ending 3 September.

It reported like-for-like turnover fell by 11 per cent on a constant current basis during the period following a continued slowdown in orders across multiple markets.

Although warm weather drove strong sales in June, fourth-quarter revenues declined by 15 per cent as rain damaged trade in July and August.

Asos has also been affected by elevated cost-of-living pressures, higher customer returns, supply chain troubles, and a widespread post-pandemic drop in the e-commerce sector.

Still, it expects the final three-month period to be profitable thanks to £300million of recent cost savings and improvement in core profitability as part of its ‘Driving Change’ turnaround programme.

Lower duty and freight costs helped the London-based firm more than double its second-half gross margins, although they came in below guidance because of significant discounting activity to reduce inventory levels.

Despite slashing its stock by 30 per cent last year, the business expects price cuts to remain until late 2024 as it aims to eliminate inventory from last year’s autumn/winter season.

José Antonio Ramos Calamonte, chief executive of Asos, said: ‘We continue to focus on bringing the best fashion and the most engaging proposition to our customers as we make progress on our journey to sustainably profitable and cash-generative growth.’

Asos was relegated from the FTSE 250 Index in June, having seen its market cap plummet in the previous two years from over £7billion to less than £500million.

Sales on its website soared during the height of the pandemic when the temporary closure of apparel stores due to lockdown restrictions produced a major windfall for online retailers.

Growth subsequently slowed as customers returned to purchasing their clothes on the high street, and cost-of-living problems hurt its young-adult target audience.

The company has also faced stiffer competition from the likes of Marks & Spencer, Next and Chinese fast fashion giant Shein.

Pressure on Asos has seen it become a potential takeover target, with Turkish online retailer Trendyol putting forward a £1billion approach last December.

Another potential suitor is Mike Ashley’s Frasers Group, the owner of Sports Direct and Evans Cycles, which has built a near-17 per cent stake in the brand.

Russ Mould, investment director at AJ Bell, said: ‘The danger for Asos is it is just no longer as relevant in a world where people can buy clothes in stores again and where the tide has turned away from the whole fast fashion concept.

‘And by failing to fix the roof while the sun was shining bright for it during the pandemic, the business is left really exposed.’

ASOS shares were 1.5 per cent, or 5.8p, lower at £3.81 on Tuesday morning.

Britain’s largest home builder Barratt Developments has revealed a slump in demand driven by the mortgage crunch, with new home reservations sliding by a third

The housebuilder’s annual results revealed an increase in its pre-tax profits and revenue but it flagged that new home reservations had tumbled since July from an average of 0.6 homes per week to 0.42 homes per week.

In a July trading update, Barratt revealed that it had built 17,206 homes this year, down 3.9 per cent annually, but it now expects to build almost a quarter less next year – with a forecast of between 13,250 to 14,250 units.

Despite the murky outlook, the Leicestershire-based builder revealed revenue was up by 1 per cent to £5.3billion for the year ending 30 June 2023, in line with expectations, and statutory pre-tax profit rose 9.8 per cent to £705.1million.

David Thomas, chief executive of Barratt Developments, said the rapid rise in mortgage rates as the Bank of England has hiked base rate from 0.1 per cent to 5.25 per cent in under two years was taking its toll. 

The average five-year fixed mortgage rate hit a peak of 6.37 per cent in July, but has since slipped back to 6.19 per cent. Two years ago the average five year fixed mortgage rate was 2.75 per cent. 

Thomas said: We have delivered a strong operational performance in a challenging operating environment.

‘Customers continue to face cost of living and mortgage affordability challenges, and new developments are increasingly constrained by an ineffective planning system.’

Barratt revealed it would cut is final dividend to 23.5p from 25.7p last year and stall share buybacks but added that it had net cash of £1.06billion on its balance sheet. 

Barratt Developments shares were down 1.94 per cent to 434.70p in morning trading on Wednesday. 

Sentiment on housebuilders has been hit as rising interest rates have significantly impacted the housing market, with City forecasters saying the Bank of England’s base rate could peak as high as 6.25 per cent as it tries to bring inflation to heel.

But housebuilders have continued to profit from high house prices, with Barratt revealing that its average private sale price was up 7.9 per cent annually to £367,000. However, Barratt added that this number had slowed from 13.6 per cent in the first half of its financial year to 3.2 per cent in the second half.

Richard Hunter, head of markets at Interactive Investor, said: ‘All things considered, Barratts is playing a decent hand with the woeful cards being dealt to them in the current environment.

The list of headwinds is well-documented and lengthy and is likely to spill over into the new financial year. 

Squeezed mortgage affordability and availability is resulting in waning customer demand, while broader concerns over general economic growth, consumer confidence and spending are all darkening the picture. 

‘At the same time, the removal of the Help to Buy scheme has removed an important plank from first-time buyers and legacy costs for remedial building work continue to come at a significant cost, totalling some £179 million in this period.

He added: ‘The uncertain outlook is reflected in the shareholder return announcement, traditionally a sign of management confidence. 

‘There will be no further share buybacks over the coming period, while the dividend has also been reduced as the group intends to retain its cash to buffer against the upcoming challenges. 

‘Despite the dividend reduction, the projected yield of 7.6 per cent remains punchy given the economic backdrop and will continue to catch the eye of income-seeking investors.’

The FTSE 100 will open at 8am. Among the companies with reports and trading updates today are Plus500, Lok’nStore Group and L’Occitane. Read the Monday 14 August Business Live blog below.

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The FTSE 100 is down 0.4 per cent in afternoon trading. Among the companies with reports and trading updates today are PageGroup, Card Factory, LSL Property Services, Carr’s Group and Clarkson. Read the Monday 7 August Business Live blog below.

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YouGov co-founder Stephan Shakespeare is preparing to step back as chief executive, the polling data provider said on Friday.

It came as the group confirmed expectations of full-year operating profits hitting between £46million and £50million for the 12 months ending July, thanks to sustained growth in margins.

But YouGov also now forecasts that turnover will be towards the bottom end of consensus estimates of £257million to £274million, despite predictions of underlying growth being ‘well ahead of the market’.

YouGov shares slumped 11.6 per cent, or 125p, to 955p by late Friday afternoon, yet their value has still more than doubled over the past five years.

YouGov said trading had made ‘good progress’ across all territories despite more challenging economic conditions, with the firm facing lengthier sales cycles and decision-making times by customers at the start of 2023.

For the six months to January, the company saw revenue jump by 30 per cent to £131.4million due to stronger demand for data products and its panel-based custom research business.

Since then, it has significantly boosted its net cash position following a successful £51.2million equity placing earlier this month, with some of the money raised planned to fund the intended acquisition of GfK’s consumer panel division.

The €315million (£270.3million) takeover will boost YouGov’s operations in Europe and expand its offering to the fast-moving consumer goods sector.

Founded in 2000 by Stephan Shakespeare and ex-Conservative Party chairman Nadhim Zahawi, the firm sells data insights to businesses and public bodies across dozens of countries.

It was listed five years later on London’s junior AIM exchange with a market value of just £18million, which has since skyrocketed to approximately £1.1billion.

As part of a board shakeup, Shakespeare is standing down as chief executive at the end of this month after 12 years in charge to replace Roger Parry as chairman.

Steve Hatch will become the next CEO, having recently been the vice president of operations for Facebook owner Meta in Northern Europe and a non-executive director at Daily Mirror publisher Reach.

Before that, he spent 15 years at the world’s largest advertising group, WPP, rising to become head of the MEC media agency – now known as Wavemaker.

YouGov is also promoting Lynda Vivian to chief operating officer, replacing Sundip Chahal, who is being made chief business officer, while ex-TSB Bank chairman Nick Prettejohn is succeeding Rosemary Leith as senior independent director.

Manufacturing production in the UK declined more steeply last month amid a continued slide in exports and depressed market confidence.

The latest UK manufacturing Purchasing Managers’ Index from S&P Global and the Chartered Institute of Procurement and Supply gave a reading of 47.1 in May, compared to 47.8 in April. Any number below 50 indicates contraction.

It marks the tenth successive month that the country’s manufacturing sector has been in negative territory, which has come against a backdrop of inflationary pressures squeezing consumer incomes and profit margins.

A downturn in performance was seen across all survey components, such as supplier lead times and output, with the latter partly impacted by client destocking, parts shortages and the bank holiday to celebrate King Charles III’s coronation.

Meanwhile, new export orders fell for the 16th consecutive month as post-Brexit trading barriers encouraged European companies to source more parts locally.

The survey additionally attributed the drop in overseas sales to stronger international competition and lower demand from mainland Europe and the United States.

Domestically, manufacturers were affected by poor market sentiment and another month of staffing contractions caused by weaker demand and cost pressures.

Decreases in new orders and output particularly impacted intermediate and investment goods sectors.

However, manufacturers benefited from the first reduction in average input costs for three-and-a-half years as supply chain snags continued easing.

British businesses have struggled with soaring energy bills in the past eighteen months following the loosening of Covid-related restrictions and Russia’s invasion of Ukraine.

After reaching a peak last summer, wholesale energy prices have since plunged by over 80 per cent, providing much-needed hope for manufacturers.

Yet Cips’ chief economist, Dr John Glen, warned that further interest rate hikes and ‘stubborn’ inflation ‘will continue to keep business owners awake at night.’

The Bank of England has put up the UK base rate 12 times in a row, from just 0.1 per cent in December 2021 to 4.5 per cent in May, to try and combat elevated inflation rates.

But though the consumer prices index has recently dipped from double-digit levels to 8.7 per cent, another rate increase is expected at the BoE’s monetary policy committee meeting on 22 June.

Soon after the latest interest rate rise, the International Monetary Fund predicted the UK economy would avoid a recession in 2023, although it admitted the country’s outlook ‘remains subdued.’

Dave Atkinson, SME & mid corporates head of manufacturing at Lloyds Bank, said: ‘Uncertainty remains over how sustainable growth is in the sector, after nearly a year of contraction with mixed forecasts of what’s to come for the economy.

‘Manufacturers want to see renewed focus behind a UK industrial strategy, which will provide the stability and confidence for long-term investment.’

Ocado is facing demotion from the FTSE 100 index this week following a slump in its share price.

The online grocery delivery firm boomed in lockdown, with its share price hitting a record 2,895p in September 2020.

But the easing of restrictions put the company on the back foot as consumers flocked back to supermarkets.

The firm has also suffered from weaker-than-expected demand for its robotic warehouse technology. As a result, the stock has tumbled over 85 per cent. 

Ocado’s losses ballooned to over £500million last year.

Analysts predict Ocado will be relegated tomorrow when the closing prices will be used to calculate the reshuffle.

It is another blow for its co-founder and chief executive Tim Steiner, who in the past year has seen the value of his 2.4 per cent stake plunge by £105million.