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Asos embarks on reorganization under new CEO's leadership

Oct 21, 2022 United Kingdom
Asos embarks on reorganization under new CEO's leadership
In the process of introducing a new business model focused on increasing flexibility within its logistics and reducing costs, Asos is writing off up to 130 million British pounds (150 million euros) of stock
The company also confirmed that to "navigate the continued macroeconomic volatility", has agreed to a 650-million-pound banking facility, expecting this move to provide additional "financial flexibility" and improve its inventory management (which had been built up inventory to cope with supply chain constraints during the COVID-19 pandemic).

This announcement came with the release of its results for the full year ended on the 31st of August 2022, in which the fashion retailer posted a pre-tax loss of 31.9 million British pounds (36.6 million euros), as compared to a profit of 177.1 million British pounds (203.3 million euros) in the previous year; adjusted profit before tax fell to 22.0 million British pounds (25.3 million euros), in line with guidance.  Asos' revenue in the full year increased by 1%, totalling 3.94 billion British pounds (4.5 billion euros), year-over-year, with sales increasing by 7% in the UK, by 10% in the US and by 2% in Europe.

The British online retailer noted that the "second half of the year proved more challenging than expected", mainly due to the gradual increase of "inflationary pressures on consumers", which "impacted consumers' confidence and discretionary income". Furthermore, "the company also saw an increase in return rates through the year, rising above pre-pandemic levels from May onwards". Together, these led to higher inventory levels across all fulfilment centres, further exacerbated by the immediate withdrawal from Russia on the 2nd of March 2022”.

Reorganization

Thus, in the coming year, the company is planning to focus on "four actions targeted at improving its ability to navigate the existing uncertainty". As mentioned, Asos intends to renew its commercial model and improve inventory management; simplify and reduce its cost structure; ensure a robust and flexible balance sheet; and reinforce the leadership team and culture.

"Today, I have set out a clear change agenda to strengthen Asos over the next 12 months and reorient our business towards the future. This includes a number of decisive, short-term operational measures to simplify the business, alongside steps to unlock longer-term sustainable growth by improving our speed to market, reinforcing our focus on fashion, strengthening our top team and leveraging data and digital developments to better engage customers", stated the online retailer's new CEO, José Antonio Ramos Calamonte.


Image Credits: theretailbulletin.com

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