Market watch: Price-cutting takes shine off celebrity fashions at Asos

By MARTIN FLANAGAN
Published on 08/07/2012 00:00

TRADING updates from Primark and Asos will this week shine a spotlight on the budget-clothing­ and online-fashion ends of the retail spectrum.

First up Tuesday is internet fashion and beauty retailer Asos, which is expected to say price cutting has helped it regain its UK sales momentum.

The company, which targets twentysomethings with clothes based on outfits first worn by celebrities, has seen its share price quadruple over the past three years as it surfs a boom in demand for internet shopping. But the price cutting drive is thought to have slashed 3 per cent off Asos’s pre-tax profit margins.

A growing tax bill is likely to squeeze margins at JD Wetherspoon as the pub chain struggles to pass on higher costs to its customers.

The company, which has around 850 pubs, has previously warned that it must slow the pace of pub openings as it grapples with a £50 million increase in its full-year tax bill.

But analysts at Numis Securities still forecast a 2 per cent rise in like-for-like sales in Wetherspoon’s latest trading update on Wednesday.

JD recently attacked cost pressures from government legislation, including increases in excise duty, business rates and carbon tax, and said its total tax bill in the current financial year will be around £500m.

Budget retailer Primark is set to shrug off retail pressures when its parent group Associated British Foods (ABF) updates the market on Thursday.

Primark will say falls in cotton prices have helped protect its profit margins.

The City expects ABF’s pre-tax profits to rise 15.6 per cent to £965m for the year to September.

Housebuilder Bovis Homes will say its focus on the south-east of England has continued to drive growth when it puts out an update tomorrow.

WEEK AHEAD

Monday: Bovis Homes; RM; Michael Page;

Tuesday: Asos; Smiths News

Wednesday: Barratt Developments; Bloomsbury Publishing; Icap; 
JD Wetherspoon.

Thursday: Associated British Foods;Ashmore Group; SuperGroup; Premier Oil

Friday: Electrocomponents; Eredene Capital