Asos saw UK sales fall by 8% in the fourth months to the end of 2022 and says it expects to report a pre-tax loss in the first half of its financial year. After that, however it expects cash generation and profitability to improve in the second half as it focuses on profitability, rethinks its approach to discounting and cuts operational costs.
The fashion pureplay today says group revenue came in at £1.3bn in the four months to December 31 2022. That’s 4% down on the same time last year. When Russian revenues and currency fluctuations were excluded, sales were 3% down on last year. In the UK, total sales of £591.3m were 8% down on last time, while sales grew in both the EU (+7% to £417.3m) and the US (+15% to £198.1m). Rest of the world sales of £129.8m were 30% down on last time.
UK sales were particularly hard hit in September and in December and New Year as delivery disruption meant final Christmas and New Year order dates were brought forward.
Looking ahead, the fashion pureplay is putting into place a strategy of more flexible operations and logistics – 23 of the retailer’s brand partners now deliver orders place via Asos direct to customers, while the retailer is also rationalising its warehousing in Europe, the US and the UK. It is reviewing order economics, removing 35 unprofitable brands from its platform and increasing prices of its own brand products by low single digit percentages. It is also rethinking its pricing strategy by using deeper discounts to clear a narrower range of stock.
Asos chief executive José Antonio Ramos Calamonte says: “We are undertaking necessary strategic and operational changes, with our focus shifting from prioritising top-line growth to building a more relevant and competitive fashion business with a disciplined approach to capital allocation and ROI. At the same time, we are working to reinforce our credibility as a leading destination for our fashion-loving customers.
“We have made good early progress against a number of measures to simplify the business, including re-positioning our inventory profile, reviewing our operational model in our top markets and reducing our cost base. While there is more to do, I am pleased by the progress made in this period and am confident in the direction we are going. We retain ample balance sheet flexibility and reiterate our expectations for FY23.”
Asos is ranked Top500 in RXUK Top500 research.