Online trend retailer Asos has posted a full 12 months loss and launched a collection of cost-cutting measures, within the newest signal that the UK’s value of residing squeeze has deflated the ecommerce increase.
Cash-strapped clients returning extra objects have harm the style retailer, which had beforehand been among the many greatest winners from a surge in on-line procuring throughout the pandemic.
The group posted revenues within the 12 months to the tip of August up 1 per cent to £3.94bn, but the hit to income was far larger as margins got here beneath strain. Asos reported a pre-tax lack of £31.9mn, down from a revenue of £177.1mn a 12 months in the past.
Mounting strain on family budgets has compounded latest difficulties for teams reminiscent of Asos and its rival Boohoo. The pandemic-induced enhance for on-line retailers had already begun to fade as shoppers returned to procuring in-person.
Asos, whose clothes is geared toward 20-somethings and its manufacturers embody Topshop and Miss Selfridge, has misplaced virtually 80 per cent of its market capitalisation this 12 months.
To counter the downturn, José Antonio Ramos Calamonte, just lately appointed chief government, introduced a swath of measures to chop prices and simplify the group’s logistics.
“In recent years, the quest for growth has resulted in Asos becoming excessively capital intensive, too complex and overstretched globally, which has resulted in a lack of meaningful growth and scale in its key international markets of the US, France and Germany,” he mentioned.
The operational modifications “will simplify the business . . . by improving our speed to market, reinforcing our focus on fashion, strengthening our top team and leveraging data and digital developments to better engage customers”, he added.
The modifications will end in “gross margin expansion, increased stock turn, faster speed to market and more effective capital deployment”, Asos mentioned.
However, the group’s determination to chop its inventory ranges would end in a writedown of between £100mn and £130mn to be booked within the first half of its 2023 monetary 12 months, Asos mentioned.
“Against the backdrop of significant volatility in the macroeconomic environment, it is very difficult to predict consumer demand patterns for the upcoming year,” Asos mentioned, warning that it anticipated “a decline in the apparel market over the next 12 months”.