Online fashion retailer ASOS said it would post a first-half loss driven by price reductions and said it would review its business model after finishing its fiscal year in the red.
ASOS posted a pre-tax loss of £32m from a profit of £177m and said trading at the start of the new fiscal year had been volatile. On an adjusted basis profits fell to £22m in the 12 months to August 31 2022, in line with recently lowered guidance and down from £193.6m last year when consumers turned to online purchases during Covid pandemic lockdowns.
The company on Wednesday said it was writing off up to £130m in excess stock after building inventory to cope with supply chain constraints. Customer returns have also increased as consumers feel the impact of soaring inflation, which on Wednesday hit an annual rate of 10.1%.
It guided for a loss in the first half driven by “elevated” markdown to clear stock resulting from the change in commercial model, but expected a fall in freight rates and cost mitigations to mostly benefit the second half.
New chief executive José Antonio Ramos Calamonte said there was a “significant need to improve the way we operate to unlock the opportunity of our global reach”.
“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.”
Reporting by Frank Prenesti for Sharecast.com
