The online fashion retailer has agreed a PS650m banking facility to give it “financial flexibility” as new chief Jose Antonio Ramos Calamonte drives his turnaround plan. It includes cutting costs, improving management of stock and refreshing the culture. Asos to Write Off Stock and Cut Costs.
The company’s problems mirror those of British retailers as muted wage growth, higher prices and austerity measures mean shoppers are reining in spending on non-essentials.
Shares in Asos rise by 14%
Online fashion retailer Asos has slumped into an annual loss and warned it will continue to struggle as shoppers rein in spending on fashi. Asos said sales had fallen and order returns rose, while cost-of-living inflation has cut consumer confidence.
The Topshop, Topman and Miss Selfridge owner is attempting to overhaul its operations, cutting costs and refreshing its product range. It is also reorganising its warehouses and looking at selling through other websites in overseas markets to reduce costs.
Investors cheered the changes and sent shares in Asos up 12% on Wednesday. Russ Mould, investment director at AJ Bell, said the new strategy demonstrated that CEO Jose Antonio Ramos Calamonte was taking the company’s challenges seriously.
Mr Mould added that Asos could also benefit from following the lead of some rivals and charging for returns. That might help to reduce excessive ordering and waste as well as bolster profitability.
Asos to write off PS100m of stock
Online fashion retailer Asos will write off up to PS100 million of stock and cut costs after annual sales growth stalled and shoppers hit by the cost of living crisis reined in spending. Asos, which trades as ASOS Plc, will also rewrite the terms of a lending facility to give it greater financial flexibility.
New chief executive Jose Antonio Ramos Calamonte has outlined an overhaul of the company that will include better management of stock, cutting costs and slowing automation in its warehouses. He said he expects this to lead to the company making a profit in the second half.
Asos to cut costs
Asos said it would reduce its cost profile as part of new chief executive Jose Antonio Ramos Calamonte’s turnaround plan. The firm will seek to redeploy people as much as possible, a spokesperson said.
It will cut costs by reducing the number of products it stocks, slowing automation in some warehouses and cutting spending.
The company has already taken a beating this year after sales growth came to a halt in the U.K.
Asos to exit some markets
It also plans to reduce stock and slow investment in its automated warehouses.
The company’s revenue fell by 8% and 10% in the U.K., well below expectations.
While this is likely to boost profitability, it may come at the expense of short-term sales. The writer owns shares in AJ Bell. Please read our terms and conditions needs read more hear.
