Asos plunges £291m into the red as shoppers return to the high street

Asos has plunged £291m into the red after sales plunged on what the online fashion retailer called a “challenging shopping backdrop” as shoppers returned to brick-and-mortar stores and curtailed spending at non-essential items.

Sales fell 8%, including a 10% drop in the UK, in the six months to February 28, much worse than the 3% forecast by the City, as the company said it had deliberately moved away from unprofitable sales and suffered from weak consumers. the demand and the December postal strikes.

The pre-tax loss of £291m, up from a loss of £16m a year earlier, came after writing down £100m in unwanted stock as Asos focuses on a limited range of products and try to upgrade your fashion faster.

Asos said sales had continued to fall in March and April and now expected them to fall by at least 10% over the year and make an underlying profit of no more than £60m.

Andrew Wade, a retail analyst at Jefferies, said Asos now looked set to make a pre-tax loss of around £70m for the year to the end of August, much more than the £19m anticipated by the city.

“Asos continues to face significant challenges, with revenue declining faster and net debt higher than anticipated,” Wade said in a note.

José Antonio Ramos Calamonte, the CEO of Asos who took over last summer, said: “Our focus is on improving our core profitability by prioritizing order economics over top-line growth and I am pleased with the strategic and rapid operating progress the business has made in the first half of the fiscal year, in the face of some very challenging business conditions. ”.

It said the company had found £100m in cost savings and secured new funding to create “a more sustainably profitable and cash-generating company”.

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Asos is struggling to adjust to a rapid change in shopping patterns in recent years, as sales regressed from a peak during pandemic lockdowns when shoppers had no choice but to shop online.

Now that the stores are open, Asos and other online fashion specialists like Boohoo are seeing sales dips as shoppers return to the high street. They’re also up against new online rivals, including China’s Shein and thrift marketplaces Depop and Vinted, which are proving popular with teens and 20-somethings.

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