ASOS has seen a “significant increase” in returns rates in the UK and Europe towards the end of the three months ended 31 May 2022 which it says reflects inflationary pressures on consumers.
That in turn has had a disproportionate impact on profitability, it said. Sales are now expected to be in the range of 4% and 7% reflecting market volatility and the increased returns rate while profit before tax is expected to be between £20m and £60m. It expects the higher returns rates to continue.
The guidance includes the impact of higher returns on warehousing and delivery costs as well as the increased markdown and labour inefficiency to clear the returned stock, the company said.
“What is now clear, based on the significant increase in returns rates that we have seen, is that this inflationary pressure is increasingly impacting our customers’ shopping behaviour,” said Mat Dunn, COO of ASOS. “It is too early to tell for how long the current pattern of customer behaviour will continue but we are taking swift and decisive steps to minimise the impacts whilst continuing to deliver against the strategic initiatives we laid out in November that will ensure that ASOS builds for the long-term.”
In the EU it said that return rates were trending above -pre-pandemic levels in some territories.
However the rollout of Partner Fulfils continues to plan with the delivery in range extension in the UK, the company said. Expansion to key territories within Europe remains on track for the second half of FY22.