Online retailer Asos has warned over sales and profits after experiencing a “significant deterioration” in trading in the run-up to Christmas.

The group, who have offices in Hercules Way, Leavesden, said in an unscheduled trading update for the first three months of the financial year that, while it delivered sales growth of 14 per cent, it “experienced a significant deterioration in the important trading month of November and conditions remain challenging”.

As a result, Asos has reduced its expectations for the current financial year predicting sales growth of 15 per cent for the year to August 2019, down from 20 per cent to 25 per cent and its anticipated earnings margin has been revised down from 4 per cent to 2 per cent.

Asos shares collapsed in morning trade, dropping 36 per cent to 2,667p when markets opened.

The warning will cause alarm among retailers as, up until now, it has been high street firms bearing the brunt of a brutal Christmas trading period.

Asos pointed to a high level of discounting and promotional activity, leading it to increase its own special offers, which typically eat into profit margins.

Unseasonably warm weather during the last three months has also seen reduced spending by shoppers, Asos added.

However, in the UK, Asos said it continues to “materially outperform”, although this has been achieved at the cost of more promotional activity than initially planned and consumers buying into lower priced product.

Trading conditions across Germany and France, which account for 60 per cent of the retailer’s EU sales, have become significantly more challenging,

Asos added: “Whilst trading in September and October was broadly in line with our expectations, November was significantly behind expectations.

“The current backdrop of economic uncertainty across markets together with a weakening in consumer confidence has led to the weakest growth in online clothing sales in recent years. We have recalibrated our expectations accordingly.”