Photograph: Dado Ruvic / Reuters
Asos intends to write off more than £ 100 million worth of shares and cut costs after falling into the red after its annual sales growth nearly halted as shoppers hit by the cost-of-living slump curbed fashion spending.
The online fashion retailer said it had agreed on a £ 650 million banking structure to give it “financial flexibility” and aimed to reorganize its operations by cutting costs, improving inventory management and “refreshing the culture” of the company.
It revealed that sales increased by only 1% to £ 3.94 billion in the year until August 21, when they fell to a pre-tax loss of £ 32 million from a profit of £ 177 million. year before. The group also claimed to have accumulated nearly £ 153 million in net debt over the previous year, when it held £ 200 million in net cash.
Shares in the sector slid more than 1% in morning trading following Wednesday’s announcement. The drop follows the plunge in Asos shares on Monday after it confirmed it was in talks with lenders to change the terms of a £ 350 million loan facility.
José Antonio Ramos Calamonte, the new CEO of Asos, said the business has become too complex, has allowed costs to rise too much and become “globally excessive” so that it lacks scale in the US. in France and Germany.
He also said the group had become too reliant on discounts to attract shoppers as it hadn’t invested enough to raise awareness of its brand or develop new products.
The disappointing sales growth came despite sales of the group’s new Topshop brand more than doubled.
Asos will now be buying its stock more frequently and closer to when it goes on sale in an effort to make sure it has the right fashions.
Calamonte said the annual results are “resilient”, but Asos could achieve “much more” and the retailer “will work resolutely to emerge from these turbulent times as a more resilient and agile company.”
He said: “Today I set out a clear change program to strengthen Asos over the next 12 months and reorient our business into the future. This includes a number of decisive short-term operational measures to streamline the business, along with measures to unlock long-term sustainable growth by improving our speed to market, strengthening our focus on fashion, strengthening our top team and leveraging data and digital developments to better involve customers “.
Asos said sales in the second half of its financial year were worse than expected as shoppers held back spending due to the cost-of-living crisis and also returned more items by purchasing garments that are more fitting than the pandemic blocks, when the elastic casual wear was popular.