Shares in Asos and Boohoo slumped as much as 30% and 17%, respectively, after the companies reported a slump in sales on Thursday.
The online retailer slashed its guidance for full-year profit and sales. It now expects sales to grow between 4% and 7% for the full year, down from previous guidance of between 10% and 15%.
Pre-tax profit at the London-headquartered business is now forecast between £20m ($24.5m) and £60m, compared to prior estimates of £110m to £140m.
It's the latest warning from Asos, which said in April that its full-year earnings target was under threat from soaring inflation and disruption caused by Russia's invasion of Ukraine.
Separately, Asos also said it had promoted chief commercial officer Jose Antonio Ramos Calamonte to take the helm and named non-executive director Jorgen Lindemann as chairman.
Calamonte will become CEO with immediate effect, taking on the role after former boss Nick Beighton left abruptly last October following a profit warning.
Boohoo reported lower sales over the three months to the end of May as it failed to keep up with a lockdown-driven boost to trading.
Revenues at the online fashion giant fell by 8% to £445.7m in the quarter. UK sales were down 1%, but it was particularly impacted by heavier declines elsewhere in Europe and in the United States.
However, it said it was optimistic as sales in the UK improved month-on-month during the time period and returned to net sales growth in May.
The Manchester-based firm, which also owns PrettyLittleThing, warned last month that sales growth may grind to a halt in the first half amid higher returns and competition as the online shopping boom spurred by the lockdown cools.
Russ Mould investment director at AJ Bell, said: "The pace at which online retailers have gone from sitting on cloud nine to being stuck in the gutter is quite remarkable.
"It only seems like yesterday when everyone was celebrating how fashion retailers were doing so well during the pandemic as people bored at home were eager to keep refreshing their wardrobe. Now the pressure on family finances has resulted in a shift in consumer behaviour with more considered purchases and more people changing their mind once they make an order.
"Elevated order returns look to put a big dent in ASOS’s earnings. Not only will the company incur higher costs from having to process returned products, but it will also have to mark down prices to shift these unwanted goods."
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