Online fashion retailer Asos said the operational change would bring in a profit of £300m in the current financial year, giving the group a much-needed lift after sales fell at Christmas.
Asos chief executive José Antonio Ramos Calamonte, who took over last year, has overhauled the company’s business model and has become fashion-conscious after profits plummeted due to the end of pandemic restrictions and a series of operational issues. We want to bring back customers in their twenties.
Asos said sales in its biggest market, the UK, were down 8% over the period due to Christmas delivery issues and a tough comparison to last year when the pandemic favored online shops.
Asos said in a statement on Thursday that it had found ways to optimize profits and cut costs. This would allow him to make more than £300 million ($364.35 million) in profits in the current financial year from moves such as the elimination of underperforming brands and the reduction of storage facilities.
The stock is up 14% on those promises of improvement, reaching levels last seen in November, but has lost 70% of its value over the past 12 months.
Analysts at Liberum called recent trading weak, adding: “There has been progress on the new strategy, but we remain cautious.”
The UK is in the midst of a cost-of-living crisis, with Asos blaming weak consumer sentiment for falling sales in the UK, while many other retailers, including clothing chain Next was able to increase sales to others.
The UK’s delivery network was crumbling in the final months of 2022 with a postal strike that lasted more than 12 days, leaving shoppers to prefer shopping in stores to worrying about delivery.
The end of the pandemic has also helped brick-and-mortar stores. UK online retail sales fell by 10.5% year-on-year for the first time last year, according to IMRG data.
In Europe, Asos performed well, with sales of over 6 Asos during the period.
By Sarah Young.Editor: Kate Holton
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