Britain’s Fast Fashion Retailer ASOS Will Revamp Its Business Model Following Slump In Profits

ASOS, the British company that was once regarded as the poster child for the shift to online fashion retailing, is set to overhaul its business model after the economic downturn and a thread of operational issues that severely hit its profits.

While ASOS’s core business in the UK stayed strong, returns from its international operations, particularly in the United States were unsatisfying, according to new CEO José Antonio Ramos Calamonte.

He promised to overhaul ASOS’s “inefficient” supply chain, re-engage its 20-something customers, better leverage its data, cut costs, and refresh its culture.

“The plan over the next 12 months is going to be focusing on simplifying the business and making it more resilient and more flexible,” Ramos Calamonte said.

“We want to be able to deliver more relevant stock and faster to consumers.”

ASOS shares were up 8.8 per cent on Thursday, as investors appreciated the shift and a new agreement with lenders, which reduced 2022 losses to 78%.

ASOS and competitor Boohoo grew quickly as young consumers all over the world snatched up their fast fashions, and demand soared again during the coronavirus pandemic as high street rivals remained closed due ot lockdown measures.

However, supply chain challenges, greater rivalry, and the steep economic downturn have harmed its business model. The ongoing issue of managing customer returns has also weighed on the company.

Ramos Calamonte stated that he was dedicated to free returns.

Last month, Boohoo, which does charge for returns, issued a warning about the outlook.

ASOS made an adjusted pretax profit of 22 million pounds ($24.9 million) in the fiscal year ending August 31, in line with guidance reduced last month and down from the pandemic-boosted 193.6 million pounds made in 2020-21.

It expects a first-half loss as it lowers prices to clear out old inventory, necessitating a non-cash write-off of up to 130 million pounds. Other restructuring charges totaling 40 million pounds will also be incurred.

ASOS will begin to operate with lower stock levels in the second half as order and delivery lead times are reduced. It would also benefit from lower freight rates and cost-cutting measures.

ASOS did not provide profit projections for the full year. Prior to the update, analysts expected an adjusted pretax profit of 61 million pounds.

While trading was volatile, it said September showed a slight improvement over August.

According to Ramos Calamonte, ASOS has more than 650 million pounds in cash and facilities and does not require another equity raise.

Capital spending for 2022-23 is expected to be 175-200 million pounds, down from 200-250 million pounds, with the phasing of automation projects being reviewed.

The CEO stated that he was unconcerned about a takeover bid and did not obsess over the share price.

(Adapted from

Categories: Economy & Finance, Entrepreneurship, Regulations & Legal, Strategy, Sustainability, Uncategorized

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