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Asos hit by supply chain constraints but hopeful of easing soon

Asos hit by supply chain constraints but hopeful of easing soon

Asos has admitted that supply chain constraints “played out as anticipated” in the four months to the end of 2021. Although revenue grew 5% CCY in the period gross margin decreased by 400 bps to 43.0%.
The company said the margin erosion was driven by heightened clearance activity to shift slow-moving ’21 spring / summer stock, as well as elevated freight costs and the use of air freight to circumvent supply chain constraints.

It said that it expected such trends to improve across the remainder of the year as peak-related supply chain bottlenecks ease and stock profile normalises. Returns rates have also normalised in line with expectations, Asos reported.

The UK delivered growth of +13%, EU +2%, and the US +11% despite significant port congestion and supply chain disruption. However the rest of the world saw a performance decline of -15% which Asos attributed to the continued impact of extended delivery propositions.

Asos also reported plans to expand its Partner Fulfils model, launched in partnership with Adidas and Reebok in the UK in November. The strategy, which sees brands supplying the inventory and Asos collecting a commission, will also roll out to Europe.

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