London, November 1, 2023
ASOS, the popular online fashion retailer, is bracing for a second consecutive year of falling sales and widening losses as it grapples with post-pandemic challenges and historic stock issues. The company’s stock plunged by more than 6% after it released its update to the market, a release that was delayed by a week due to auditors’ requests for additional time.
Under the leadership of Chief Executive Officer Jose Antonio Ramos Calamonte, ASOS has been attempting to navigate a decline in demand following the pandemic, along with persistent stock problems. Calamonte has initiated efforts to cut costs, reduce excess fashion volumes, and revamp product ranges. When asked about recent rumors regarding the potential sale of the Topshop brand, Calamonte remained tight-lipped, stating, “We don’t comment on rumors.”
ASOS has cautioned that historical stock issues will continue to impact sales and profitability in the current financial year, with sales expected to decline between 5% and 15%. The company reported an annual loss of £29 million for the year ending September 3, with revenues down by 11%. On a statutory basis, pre-tax losses widened sharply to £297 million from £32 million in the previous year.
This struggle stands in stark contrast to ASOS’s competitor, Next, which recently announced its fourth profit upgrade in six months following a 4% rise in full-price sales during the third quarter ending October 28.
Addressing investors, Calamonte acknowledged the challenges faced by ASOS, stating, “FY23 was a year of good progress for ASOS in a very challenging environment, and I am proud of what the business has achieved.” He highlighted efforts to reduce stock balance, enhance core profitability, and strengthen the balance sheet. Calamonte expressed confidence in the new commercial model implemented over the summer months, aiming to accelerate processes and improve speed to market.
However, industry analysts have expressed concerns about ASOS’s performance. Russ Mould, AJ Bell’s investment director, commented on the company’s situation, stating, “ASOS is battered and bruised. While the company desperately tries to talk up progress with reshaping the business, the headline numbers for its full-year results tell a different story.”
ASOS faces a daunting challenge ahead as it strives to regain its footing in the fiercely competitive online fashion market. The company’s ability to adapt to changing consumer demands and overcome historical hurdles will be crucial in determining its future success.