Shoppers walk down Oxford Street in London on March 10, 2017. / AFP PHOTO / CHRIS J RATCLIFFE (Photo credit should read CHRIS J RATCLIFFE/AFP/Getty Images)

Online retail giant ASOS has issued a shock profit warning for the financial year, causing fresh fears that the British economy is beginning to wilt under Brexit uncertainty.

The fashion e-commerce site has warned of weak profits this financial year after “unprecedented” discounting hit its trading in November.

The financial forecast adjustment led to ASOS shares falling by nearly 40%.


The warning also caused falls in other retail shares amid growing fears that the troubles facing the British high street have started to spread online.

Retailers are now concerned consumer confidence is at an all time low, with people reining in spending against a a backdrop of political and economic uncertainty.

Commenting on the reason for weak profits, Asos said cutting prices to match rivals had not shifted more clothes and led to business in November, which is traditionally a strong month for online retailers, performing “significantly behind expectations”.

ASOS chief executive officer, Nick Beighton, says the fashion industry was currently experiencing a level of discounting he had never experienced before. He also described consumer confidence as “fragile”.

Jewellers have also faced pricing wars, with many struggling to compete with offers online and others complaining competitors are placing unattainable price tags on products.

The Watches of Switzerland Group have been very open about its disapproval of the discounting culture in the UK jewellery industry, and now focus on exclusive products that cannot be entered into a pricing war.

Elsewhere, independent jewellers are working with suppliers to offer consumers a fair price, while not undermining the value of the products for sale.

As a result, many jewellers refused to discount heavily during November’s Black Friday weekend, and instead found other ways to take part.