Asos has issued a warning that their sales are expected to decrease by as much as 15% in the upcoming year. This announcement comes after the release of their delayed results, which showed a significant decline in profits, resulting in a loss of nearly £300m for the year.
Experts are concerned that the e-commerce fashion platform may have to secure additional funding, potentially by selling its Topshop brand. This is due to the fact that its net debt, which includes leases, has increased to £648.5m from £533m in the previous year.
The CEO of Asos, José Antonio Ramos Calamonte, stated that the company has made significant strides in a difficult market and will continue to introduce trendy products and enhance its brand.
The business intends to allocate an additional £30 million towards marketing and stated that it would be refocusing on fashion with its products designed to reflect the latest trends and create buzz.
Asos has experienced a decrease in online purchases since the lifting of Covid pandemic restrictions, as well as increased competition from companies like Shein, a fast fashion online retailer, and traditional retail stores with both physical and online presence, such as H&M and Zara.
The Asos report, released on Wednesday (a week later than scheduled), stated that sales decreased by 10% to £3.5 billion in the fiscal year ending on September 3rd, while profits dropped from £32 million to £296.7 million compared to the previous year.
Calamonte stated that the removal of excess inventory in the upcoming year will continue to hinder sales growth and profitability. It is predicted that sales will decrease by 5% to 15%, but the company is hopeful that selling off stock will help reduce net debt.
According to him, Asos has made great progress in increasing the overall profitability of the company over the past year. They are currently taking decisive steps to sell off stock from their previous model while also improving their speed in getting products to market. Additionally, they are investing in their brand to remind customers of their focus on fashion.