On-line vogue retailer Asos has posted a full yr 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 growth.
Money-strapped clients returning extra objects have harm the style retailer, which had beforehand been among the many largest winners from a surge in on-line purchasing through the pandemic.
The group posted revenues within the yr to the tip of August up 1 per cent to £3.94bn, but the hit to earnings was far higher as margins got here underneath strain. Asos reported a pre-tax lack of £31.9mn, down from a revenue of £177.1mn a yr in the past.
Mounting strain on family budgets has compounded current difficulties for teams equivalent to Asos and its rival Boohoo. The pandemic-induced enhance for on-line retailers had already begun to fade as customers returned to purchasing 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 yr.
To counter the downturn, José Antonio Ramos Calamonte, lately appointed chief govt, 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 an absence of significant development and scale in its key worldwide markets of the US, France and Germany,” he stated.
The operational modifications “will simplify the enterprise . . . by bettering our velocity to market, reinforcing our deal with vogue, strengthening our high crew and leveraging information and digital developments to higher interact clients”, he added.
The modifications will lead to “gross margin growth, elevated inventory flip, sooner velocity to market and more practical capital deployment”, Asos stated.
Nonetheless, the group’s resolution to chop its inventory ranges would lead to a writedown of between £100mn and £130mn to be booked within the first half of its 2023 monetary yr, Asos stated.
“In opposition to the backdrop of serious volatility within the macroeconomic setting, it is vitally tough to foretell client demand patterns for the upcoming yr,” Asos stated, warning that it anticipated “a decline within the attire market over the subsequent 12 months”.
