Asos UK sales drop amidst ‘challenging trading conditions’

Asos has revealed that revenue declined by four per cent in the last few months of 2022, as the company faced “challenging trading conditions”.

During the same four-month period, the British online fashion retailer reported a drop in UK sales of eight per cent, attributing the loss to “weak consumer sentiment”.

But sales across the retailer’s US and EU businesses were up 15 per cent and seven per cent respectively.

Asos said that UK sales were particularly impacted by news coverage in September and disruption to the delivery market in December.

It explained that earlier cut off dates for Christmas and New Year deliveries forced it to reduce market spend.

The company also said that during the same period of 2021, the Omicron Covid variant had boosted online retail sales to a higher rate than usual.

Sales at Asos have been weakening since August, when the retailer identified accelerating inflationary pressures as the main driver for the loss. At the time, it said that profit for the year would be around the bottom end of company guidance.

In October, the company also announced plans to write off up to £130 million of stock after recording a £39 million loss, while later in the year it said it would axe roughly 100 jobs.

"We are undertaking necessary strategic and operational changes, with our focus shifting from prioritising top-line growth to building a more relevant and competitive fashion business with a disciplined approach to capital allocation and ROI,” said José Antonio Ramos Calamonte, chief executive of Asos. “At the same time, we are working to reinforce our credibility as a leading destination for our fashion-loving customers.”

As part of its 2023 turnaround plans, Asos said it has measures in place to drive £300 million in profit.

It will also cut 35 unprofitable brands from its platform over the next six months, while winding down a storage facility in the UK, US, and EU.

The company still predicts a loss for the first half of the year, driven in part by inflation. While it expects these headwinds to continue into the second part of the year, it said that these would be "more than offset" by its turnaround measures.

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