Asos swings to loss as price of dwelling disaster bites

On-line vogue retailer Asos has posted a full-year loss and launched a sequence of cost-cutting measures, within the newest signal that the UK’s price of dwelling squeeze has deflated the ecommerce increase.

Asos, whose clothes is geared toward 20-somethings and its manufacturers embrace Topshop and Miss Selfridge, additionally flagged that its operational modifications to chop inventory ranges, cut back spending and gradual automation would hold it within the purple within the first half of its 2023 monetary 12 months.

Nevertheless, buyers reacted positively to the strikes, sending Asos shares 9 per cent larger to 534p in early London buying and selling, narrowing their loss this 12 months to 78 per cent.

Money-strapped prospects returning extra objects have harm the style retailer, which had beforehand been among the many greatest winners from a surge in on-line procuring in the course of the pandemic.

The group on Wednesday reported revenues up 1 per cent to £3.94bn within the 12 months to August 31, but larger prices and squeezed margins resulted in Asos posting 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 difficulties for teams comparable to Asos and its rival Boohoo, with the pandemic-induced enhance for on-line retailers fading as shoppers return to in-person procuring.

To counter the downturn, José Antonio Ramos Calamonte, lately appointed chief government, introduced a swath of measures to chop prices and simplify the group’s logistics.

“In recent times, the search for development has resulted in Asos turning into excessively capital intensive, too complicated and overstretched globally, which has resulted in a scarcity of significant development and scale in its key worldwide markets of the US, France and Germany,” he mentioned.

The operational modifications “will simplify the enterprise . . . by bettering our velocity to market, reinforcing our deal with vogue, strengthening our prime crew and leveraging information and digital developments to higher have interaction prospects”, he added.

The modifications will end in “gross margin growth, elevated inventory flip . . . and simpler capital deployment”, Asos mentioned.

Nevertheless, Asos warned the modifications would end in a writedown of between £100mn and £130mn, to be booked within the first half of its 2022-23 monetary 12 months.

“In opposition to the backdrop of great volatility within the macroeconomic surroundings, it is extremely troublesome to foretell client demand patterns for the upcoming 12 months,” Asos mentioned, warning that it anticipated “a decline within the attire market over the following 12 months”.