Online fashion firm Asos warned that a cutback in spending by shoppers amid the cost-of-living crisis will hit profits as it announced a new chief executive and chairman.

The group slashed its outlook for sales and profits after seeing a sharp rise in order returns as customers rein in spending in the face of rocketing inflation, sending shares plunging by more than a fifth on Thursday morning.

It saw UK sales growth drop to 4 per cent to £431.8 million (€503m) in the third quarter to May 31st as returns rates rose, while total group revenues fell to £983.4 million from £987.9 million a year earlier.

It now expects full-year sales to grow by 4 to 7 per cent, with underlying pretax profits of between £20 million and £60 million.

Chief operating officer Mat Dunn said: “What is now clear, based on the significant increase in returns rates that we have seen, is that this inflationary pressure is increasingly impacting our customers’ shopping behaviour.”

Rival Boohoo is considering charging customers to send back garments as an increasing rate of returns crimps sales at the fast-fashion retailer. – PA/Bloomberg