MARKET REPORT: Online clothing retailer Koovs falls out of fashion as shares dive 42.6% after sales warning

Online clothing retailer Koovs fell out of fashion with shareholders after warning next year’s sales will be hit by a reduction in its marketing budget.

Koovs said it has significantly cut its marketing to address ongoing funding requirements and sales in 2018 will be affected as a result.

It added any additional marketing spend will depend on the closure of its funding programme, which it announced back in July.

At the time it said it would raise £18.9million to invest in ramping up its brand awareness – but has currently raised just £8.9million of the total. The revelations sent shares in the company, which bills itself as the ‘Asos of India,’ plummeting 42.6 per cent, or 11.5p, to 15.5p.

Koovs was set up in 2010 and sells western inspired fashion to trendy Indian youths.

It is chaired by Lord Alli, 53, the founding chairman of Asos who appointed 59-year-old Mary Turner, an ex-Asos director, as its chief executive in 2015.

But despite having a wealth of Asos experience on its board, it has so far failed to emulate the success of its larger Western rival.

Shares have slumped 91 per cent since it first listed on the London Stock Exchange in 2014, while Asos is up more than 26,000 per cent since first listing in 2000.

Koovs said its trading has been hit by the introduction of Goods and Services Tax, heavy discounting and marketing spend by rivals Amazon and Flipkart as well as India’s decision to remove certain bank notes from circulation last November.

The measure heavily hit online sales at Koovs since shoppers in India often pay in cash after their products are delivered.

Yesterday Koovs reported a slight dip in sales in the six months to the end of September at £3.9million from £4million while losses narrowed to £7.8million from £9.1million.

The FTSE 100 finished 7.1 points higher, or 0.1 per cent, to 7,544.1 points, while the FTSE 250 finished up 86.1 points higher, or 0.4 per cent, to 20,341.5 points, thanks in part to Hikma Pharmaceuticals which soared after agreeing a licencing deal with a South Korean rival

As part of the deal with Celltrion, Hikma will have the exclusive rights to market and distribute the biopharmaceutical firm’s Truxima drug in its Middle East and North African markets.

Shares jumped 4.5 per cent, or 48p, to 1120p following the news.

News that it had poached a rival healthcare boss to serve as its chief financial officer failed to revive shares at UDG Healthcare.

The services provider fell 5.8 per cent, or 52p, to 843p, despite announcing that it had appointed Nigel Clerkin, former chief financial officer of healthcare rival Convatec, as CFO.

Engineering firm Van Elle slipped after its founder vowed to keep a close eye on the company following a rejected comeback coup by shareholders.

Michael Ellis, 73, said he believes the firm has gone backwards since he left as chairman at the end of last year and picked a public fight over its performance with the board.

He and his family still own about 20 per cent of the Nottinghamshire engineer but on Monday his efforts to replace directors with him and his son-in-law were voted down by independent shareholders.

Shares in Van Elle, which provides services such as drilling and foundation testing, have fallen more than 38 per cent this past year after a profit warning and finished down 1.7 per cent, or 1.5p, to 89p, yesterday.

Ellis claims the firm grew steadily until he left and could do so again with the right team in place. He has also raised concerns about staff morale and financial reporting.

However, the board hit back at his criticisms, saying trading has been in line with expectations.