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](http://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/news-article-image-folder/bg asos 508521.png/jcr:content/renditions/original-size.webp)
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.’
Practise 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.
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
![](http://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/ContentImage/Shares global component NA banner.jpg/jcr:content/renditions/original-size.webp)
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get commission from just 0.08% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
- Forex
- Shares
- Indices