Asos said it would take “necessary action” to turn around its fortunes, after the fast-fashion retailer’s losses in the first half widened. Sales also fell by almost a fifth.
In the six-month period ending 3 March, sales were down 18% on a year-over year basis. This led to a pre-tax loss underlying of £120m. The loss amounted to £87.4m during the same time period last year.
Asos has suffered from more difficult trading conditions following the pandemic, as consumers are moving away from exclusively buying online.
The Shein, as well as retailers who combine both online and in-store retailing such as H&M or Zara, are also fierce competitors.
The business is trying to implement a turnaround strategy that focuses on reducing the volume of new stock.
It claimed to have cut the amount of new stock it received by 30% in comparison with last year, in order to “facilitate a better sizing of the stock” while also selling a large volume of the old stock that accumulated due the pandemic.
Asos stated that the high proportion of old stock sales and the “suboptimal newness” in what was offered made the product less appealing to the customer, resulting in a drop in sales.
Investors were told that the company felt it had “the right level of novelty to excite customers” over the next six months. More than 60% sales are now free of markdowns and promotions.
The new strategy of the firm includes a “Test and React” model, which allows new designs to be quickly marketed online in three weeks.
This approach is similar to that of rivals like Shein who push for faster development of products, from concept to clothing. The Chinese ecommerce company can turn around certain products in as few as 10 days.
Asos’ chief executive, Jose Antonio Ramos Calamonte said: “At this time last year, we announced that 2023-24 was going to be the year in which Asos would continue its transformation as we implement the necessary measures to create a business more profitable and cash generative.”
He said that the company is now “faster, more agile”, and laying the groundwork for a sustainable and profitable growth.
Asos also announced that it will be hiring former Sainsbury’s executive Dave Murray to become its new Chief Financial Officer at the end this month.