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Asos cites charging for returns in turnaround progress, despite sales drop


Online fashion retailer Asos has reported a 15% fall in fourth-quarter sales and forecast earnings, but stressed it is still making progress with its Driving Change plan.

In its latest statement covering the three months to 03 September 2023, Asos estimated its earnings before interest and tax to be “around the bottom of the guided £40m to £60m range”. The ecommerce giant’s sales were “weaker than expected” in July and August due to the wet weather.

However, it predicted its new commercial model would improve profitability, with a step away from discounting.

Asos joined a host of other retailers last year and began charging for ecommerce returns. A fee of £1.99 will be taken for any returns made after fourteen days, but within the twenty-eight day returns window. It explained this move has maximised its opportunity to resell returned products at full price.

The retailer has also placed restrictions on Buy Now, Pay Later solutions at checkout, which has had a positive impact on return rates since these changes were introduced.

Furthermore, optimisation of its distribution network has resulted in a c.20% reduction in UK fixed warehouse cost per unit despite inflation headwinds.

José Antonio Ramos Calamonte, chief executive officer, said: “Asos has delivered on the Driving Change agenda and as a consequence is a leaner and more resilient business twelve months after its launch.

“We have reduced our stock balance by c.30%, significantly improved the core profitability of the business and generated cash against a very challenging market backdrop.

“We continue to focus on bringing the best fashion and the most engaging proposition to our customers as we make progress on our journey to sustainably profitable and cash generative growth.”

Read more about Asos in an exclusive company profile in the recently published RetailX Global Fashion sector report 2023.

Discover how the Bristol-based company has revamped its marketplace technology stack and has teamed up with end-of-line luxury fashion marketplace Secret Sales in a bid to right-size its portfolio. It has also rolled out AI to create better targeted offers.

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