Asos reports huge fall in sales, will switch to new strategy
E-tailer blames soaring inflation and supply chain issues
Fashion retailer Asos has reported a significant drop in sales, prompting it to consider a change in strategy.
Revenue down 14%
In a trading update for the four months to 30 June, Asos said total sales fell by 14% to £983.4m year-on-year.
UK sales down 20%
Sales in the UK fell by a fifth to £338.5m, while international sales decreased by 11% to £644.9m.
Underlying profit warning
Asos warned that underlying profit would be “significantly below” last year’s £193.8m. It said it now expected profit to be in the region of £30m to £50m.
Cost of living crisis
Asos said the decline in sales was due to a number of factors, including the cost-of-living crisis, which has squeezed consumer spending. It also said it had been affected by supply chain issues.
Strategy change
Asos said it would now consider a “strategic review” to see if it can find ways to improve performance.
Cutting jobs
The company has already announced plans to cut 500 jobs as part of a cost-cutting drive.
Shares fall
Shares in Asos fell by more than 10% on the news.
Expert reaction
“Asos is facing a number of challenges, including the cost-of-living crisis and supply chain issues,” said retail analyst Richard Hyman. “The company needs to find ways to reduce costs and improve efficiency.”Russ Mould, investment director at AJ Bell, said that Asos is “trying to chart a course through very stormy waters right now”.
He added: “The company is in a difficult position. It is facing a number of challenges, and it is not clear how it will emerge from them.”
