For fashion-loving 20-somethings around the world, ASOS is the place to shop. Baggy hoodies, tailored jackets and effortlessly cool jeans are all available from the online retailer. Write Off Stock and Cut Costs
But a slump in spending and excessive discounting are hitting profits. And now the company has to write off a lot of stock and slow automation in some warehouses.
Sales fall
Online fashion retailer Asos Plc’s sales fell and loss widened in the first half as shoppers reined in spending and return rates rose. The owner of the Topshop, Topman and Miss Selfridge brands cut costs, accelerated its stock clearance plans and removed unprofitable brands from its roster.
Asos and rivals like Boohoo Group Plc and Zara owner Inditex SA suffered as British shoppers prioritized spending on essentials like food and energy. They also faced increased competition from secondhand marketplaces like Depop and Vinted and new online rivals from China’s Shein.
Chief commercial officer Jose Antonio Ramos Calamonte, who replaced Nick Beighton as chief executive last year in a clean sweep of leadership, said the company would become more efficient by shortening its buying cycle and reducing stock held in fulfillment centres. The company will also change how it offloads excess stock to reduce its reliance on discounting.
Returns rise
It offers over 850 brands and its own range, dispatched from state-of-the-art fulfillment centers around the world.
Return rates have risen as shoppers rein in spending amid the cost-of-living crisis and a switch to fitted clothing following the pandemic. That is a big hit to the business, which has racked up an enormous debt pile.
The firm has laid out survival plans including cutting stock, reducing spending and slowing investment in its robotic warehouses. It is writing off up to PS130m worth of stock and has launched a deal with Secret Sales to sell discounted items. It is also focusing on improving order economics and delivering on profit improvement initiatives.
Profits hit
A year ago Asos and fellow online fashion specialists such as Boohoo were seen as the future of retailing.
Investors were braced for a profit warning but the company’s new boss has promised to turn things around. Shares rose nearly 9% in early trading.
Managing director Jose Antonio Ramos Calamonte
Asos said it had agreed a new banking facility that would give it “financial flexibility”.
He has promised to limit discounting and reduce marketing spending in a bid to boost sales and profits. AJ Bell investment director Russ Mould said the new boss had shown he was taking the challenges facing Amos seriously needs read more hear.
