Online fashion company Asos has slumped to a full-year loss and warned it will remain in the red in the first half of its new fiscal year amid turnaround efforts and an “incredibly challenging” economic backdrop.
The group reported pre-tax losses of £31.9m for the year to 31 August, against profits of £177.1m a year earlier, after trading has been tougher than expected in recent months as inflation has run rampant prompted shoppers to rein in their spending.
On an underlying basis, pre-tax profit fell 89 per cent to £22m.
It confirmed it was agreeing new terms with its lenders on a $350 million credit facility.
In its full-year results, Asos said trading has remained volatile year-to-date, with September showing only a “slight” improvement from a difficult August.
The group forecasts that the overall apparel market will decline over the next year as the cost of living crisis hits consumers hard.
A restructuring led by new chief executive Jose Antonio Ramos Calamonte will include moves to “right-size” shares, but will result in a first-half loss as it introduces discounts for change clothes.
The group, which owns brands including Topshop, added that it will take depreciation of between £100m and £130m from the inventory changes, but that this will pay off in the second half, albeit with cost savings and lower purchasing costs coming through .
Mr Calamonte said: “Against the backdrop of an incredibly challenging economic environment, this unique combination has enabled our company to deliver a robust performance this financial year in the UK – but I know we can do far more as a company.
“Today I set out a clear change agenda to strengthen Asos over the next 12 months and position our business for the future.
“This includes a number of critical short-term operational measures to simplify the business, as well as steps to unlock longer-term sustainable growth through faster time-to-market, greater focus on fashion, strengthening our top team, and leveraging data and digital advances to better engage with customers .”
https://www.independent.ie/business/world/asos-slumps-to-a-loss-as-shoppers-cut-back-amid-cost-of-living-crisis-42078558.html Asos slumps to a loss as shoppers save amid cost-of-living crisis