CNA – Britain’s ASOS, the one-time poster child for the shift to online fashion, vowed yesterday to overhaul its business model after the economic crunch combined with a string of operational problems to hammer its profits.
With its shares down 80 per cent this year, new CEO José Antonio Ramos Calamonte said the firm would address unsatisfactory returns from its international operations, particularly from the United States (US). He would also improve ASOS’s “inefficient” supply chain, find a way to re-engage its 20-something customers, better leverage its data, cut costs and refresh the company’s culture.
“Over the next 12 months I’ll be focusing on simplifying the business and making it more resilient and flexible,” Ramos Calamonte told the media.
“We want to be able to deliver more relevant stock and faster to consumers.”
ASOS and rival Boohoo grew rapidly as young customers around the world snapped up their fast fashions, and demand surged again during the COVID-19 pandemic when high street rivals were closed.
But major supply chain issues, increased competition and the sharp downturn in the economy have badly affected its business model. The perennial problem of managing customer returns has also weighed on the business.
Boohoo warned on the outlook last month. ASOS made adjusted pretax profit of GBP22 million (USD24.9 million) in the year to August 31, in line with guidance that was lowered last month and down from the pandemic boosted GBP193.6 million made in 2020-21.
It said it would report a loss in the first half as it slashes prices to clear stock, requiring a non-cash write-off of up to GBP130 million.
In the second half, ASOS will begin to operate with lower stock levels due to the lead time on orders and deliveries. It would also benefit from reduced freight rates and cost cuts.
ASOS did not give profit guidance for the full year. Prior to the update, analysts on average were forecasting an adjusted pretax profit of GBP61 million pounds. It said while trading was volatile, September had showed a slight improvement relative to August.
