Aston Martin share price loses 20% as company announce sales target

Aston Martin’s share price crashed 21 per cent this morning as it warned that macroeconomic challenges have “worsened” for the luxury car manufacturer.

Shares slipped to 820p from an open of 841p as Aston Martin slashed its sales expectations in the face of market “softness” for the rest of 2019.

“The challenging external environment highlighted in May has worsened, as have macro-economic uncertainties,” the company said.

“We anticipate that this softness will continue for the remainder of the year and are planning prudently for 2020.”

It now expects sales to be between 6,300-6,500 vehicles, compared to earlier predictions of 7,100 to 7,300 cars.

The firm plans to improve efficiency and cut fixed costs in preparation for 2020, and outlined a new earnings before interest, tax, depreciation and amortisation (Ebitda) margin of around 20 per cent for the current year.

“Whilst retails have grown by 26 per cent year-to-date, our wholesale performance is adversely impacted by macroeconomic uncertainty and enduring weakness in UK and European markets,” chief executive Andy Palmer said.

“We are disappointed that short-term wholesales have fallen short of our original expectations, but we are committed to maintaining quality of sales and protecting our brand position first and foremost.

“We are today taking decisive action to manage inventory and the Aston Martin Lagonda brands for the long-term.”

Neil Wilson, chief analyst of Markets.com, warned that investors will be angered that Aston Martin looked like a better investment prospect at its October IPO than it has turned out to be.

“Investors are never too happy when a prospectus looks to have been polished up a little too much,” he said.

“It’s delivering growth, just not at the speed at which management thought.”

Aston Martin made its London Stock Exchange debut late last year with a share price of 1,900p.

Since then its share price has plunged by more than half – 57 per cent – to today’s low price.

Asos issues loses a quarter of its value overnight as sales plummet

Asos lost almost a quarter of its value yesterday after a bungled warehouse overhaul knocked the online retailer’s sales growth off course and prompted its third profit warning in a year.

Investors fear one of the brightest names in retail is coming under intense pressure from rivals while its investment-hungry business model stumbles.

Asos was founded in 2000 by Nick Robertson, 51, grandson of the founder of fashion label Austin Reed, and his brother Nigel.

It listed on Aim in 2001 at 20p a share and enjoyed an explosion in sales and value as it cornered the fast-fashion market. It has 18.4 million customers, more than a billion visits to its website and employs about 4,400 people.

Yesterday’s warning sent the shares down by 636p, or 23.2 per cent, to £21.07, meaning the company’s value has fallen by 65 per cent this year.

Investors appeared to be unmoved by the chairman Adam Crozier’s attempt to support the business by buying £100,000 worth of shares.

Asos said that its pre-tax profit will now be about £30 million to £35 million this year, £20 million less than analysts expected. Total sales grew 12 per cent to £919.8 million in the four months to June 30, far below its typical growth rate of 25 per cent.

The company blamed a disastrous IT upgrade at its Berlin warehouse which meant its automated software couldn’t cope with the volume of returned clothes. This resulted in stock clogging up its supply chain, a shortage of goods and customers not being able to buy what they wanted from its website. Nick Beighton, the chief executive, said: “The European customer experience has not been as good as it once was or should be”.

He said the problems should be fixed by September, although analysts at Investec warned that if they remained by November’s peak trading during Black Friday the company would face “calls for management changes and further severe downgrades”.

Asos’s US ambitions have been hampered as its Atlanta warehouse has only been able to stock half the fashion ranges the retailer sells in the UK after third-party brands ran into border control difficulties.

US customs require extra details about the chemical composition of clothes and manufacturer documentation, which a clutch of smaller brands did not have the resources to handle.

Mr Beighton, 50, said there wasn’t an issue with customer demand and highlighted that the number of visits to the website had grown by almost a fifth, but order volumes lagged at 11 per cent.

“In any business of scale there is complexity, it’s unavoidable,” he added. “We are turning from a UK-centric seller into a local international operator and that requires proper muscle and infrastructure to deliver.”

The collapse in the share price means that Asos is worth £1.7 billion, significantly less than its smaller rival Boohoo’s £2.4 billion market value. Boohoo made sales of £856.9 million compared with its rival’s £2.4 billion revenue.