Asos says it is taking steps to recover as it reports 18% sales drop
Asos has said it will take “necessary actions” to transform its fortunes after the fast fashion retailer’s firsthalf losses widened and sales fell by nearly a fifth.
The company reported an 18% drop in sales year on year for the first six months to 3 March. This contributed to an underlying pre-tax loss of £120m, up from a £87.4m loss during the same period a year earlier.
Asos, which benefited when physical shops were shut during Covid lockdowns, has been hit by more challenging trading conditions postpandemic as consumers shift away from buying exclusively online.
It also faces stiff competition from rivals such as Shein and retailers with a combination of stores and online sales, such as H&M and Zara.
The losses come as the business attempts to put in place a turnaround plan which has focused on reducing volumes of new stock. It said it had cut its intake of new stock by 30% compared with last year in a move to “facilitate the rightsizing of stock”, while selling off a significant volume of old stock at a discount.
The company told investors this was “the medicine it needed to take” and it felt confident it had the “right level of newness to excite customers” in the next six months of trading. More than 60% of sales now excluded markdowns or promotions.
The firm’s new strategy includes a model that fast-tracks new designs to retail them online within three weeks, called “test and react”.
The approach echoes rivals such as the Chinese e-commerce company Shein, which are able to turn around some products in as little as 10 days.
José Antonio Ramos Calamonte, the chief executive of Asos, said: “At the beginning of this year we explained that 2023-24 would be a year of continued transformation for Asos.”
He said the company was now becoming “faster and more agile” and was laying the foundation for sustainable profitable growth.
Separately, Asos said Dave Murray, a former Sainsbury’s and Amazon executive, would start as chief financial officer at the end of the month.