Asos losses swell and firm sees UK sales fall 10%
Moves to slash costs at Asos, the online fashion giant that has seen sales take a battering as consumer finances are squeezed, have contributed to statutory losses swelling to £290.9 million it has emerged.
The London-founded business popular with fashion fans aged 16-35, said revenue in the first half to February 28 dropped 8% to £1.8 billion, and in the UK sales were down 10%.
In an update that laid bare how a flurry of headwinds are biting, the company which owns brands including Topshop and Miss Selfridge, also posted a statutory £290.9 million pre-tax loss, wider than the £15.8 million loss from a year earlier.
Shares in Asos, which has seen its share price drop by almost half since a year ago, tumbled 9%, or 57.2p to 578.6p this morning.
A plan by new boss José Antonio Ramos Calamonte that saw less discounting and more full-price items was among factors that hit sales, alongside “a challenging trading backdrop”.
Ramos Calamonte, who has led the FTSE 250 company since June 2022, said Asos has observed a number of patterns. He told the Evening Standard: “Demand has returned to more normal pre-Covid conditions [compared with the pandemic booming online market], shoppers are facing the cost of living crisis and some are taking longer to decide on purchases.”
He added that unpredictable weather had hit some sales, although outerwear had unusually seen double-digit growth in May so far.
The boss previously launched a £300 million cost saving plan for the 12 months to August 2023. Measures include removing 35 unprofitable brands from the website, reducing office space and closing three warehouses. That has led to a number of one-off costs.
The firm said it will retain its focus on profitable sales in the second half and “its commitment to exit the year with a cleaner inventory position”.
If there is no improvement to the external trading environment, the retailer expects a low double digit sales decline for this half and a return to profitability with core earnings of £40-£60 million.
Ramos Calamonte said: “I am very confident of our return to sustainable profit and cash generation in the second half of the year and beyond.”
A note from analysts at Peel Hunt said the first half figures “represent the nadir for Asos in terms of losses, net debt and expectations”.
Julie Palmer, a partner at Begbies Traynor, said: “Today’s almost £300m loss might seem like yet another blow but it’s one the market was braced for. Asos had previously warned much of this dive deeper into the red would come from writing off unwanted stock which hasn’t sold and is clogging up the company’s distribution chain, with inflation and other rising costs also big contributors.”