Asos (ASC.L) CEO Nick Beighton has stepped down from the e-commerce giant, ending a 12-year stint, as the clothing retailer warned of slowing sales growth.
Blaming supply chain disruptions and global backlogs due to COVID-19, the retailer said sales growth would slow to a mid-single-digit percentage rate in the first half. It also said it expected a decline in adjusted pretax profit this fiscal year to between £110m and £140m.
Earnings were short of analyst estimates in August.
Despite this, year-on-year sales growth for Asos's 2020-2021 financial year stood at 22%, with a 36% bump in the UK due to a shift in lockdown shopping habits.
"What will undoubtedly disappoint this morning is management’s expectation of FY22 sales growth in the 10-15% range (below consensus at 18%) and PBT in the £110-140m range, with the mid-point c.30% below current consensus," said analysts at Shore Capital.
Amid a wider leadership reshuffle, Asos said it will start looking for a replacement for Beighton, and that CFO Mat Dunn will step up to lead day-to-day business as well as acting as COO.
Senior independent director and chair of the audit committee Ian Dyson is set to become chairman, replacing Adam Crozier and leading the search for a new CEO.
"Cost inflation is a problem affecting multiple industries, so not something that can be blamed on Nick Beighton. But he appears to have lost his position in the company due to a struggle to sustain momentum in the business," said Russ Mould, investment director at AJ Bell.
“Asos seems to have found it hard to keep up with the fast fashion movement in recent years, coming under criticism for not being able to turn around new product designs quickly, experiencing warehouse problems and poor stock availability."
Asos stock fell more than 15% following the news, settling around 10% lower by mid-morning.
Shore Capital noted that shares are likely to be trading at a discount until a new CEO is found, potentially providing a good entry point to the stock.
"Looking ahead, while our performance in the next 12 months is likely to be constrained by demand volatility and global supply chain and cost pressures, we are confident in our ability to capture the sizeable opportunities ahead," said Dunn.
"In the last two years, we have transformed Asos with investment in infrastructure and the customer offer; we have generated strong revenue growth and free cash flow and improved structural profitability."
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