Asos seeks discount from suppliers to offset rising inflation

Asos has demanded a discount on orders from its suppliers
Asos has demanded a discount on orders from its suppliers
// Asos has written to suppliers to ask for a 2% trade discount to offset the impact
// The online retailer will apply the discount on orders with invoices dated from 1 February

Asos has written to its suppliers to request a 2% “trade discount” to offset the impact of rising inflation.

The online fashion giant contacted its Asos Design and third-party branded supplier base today, according to Drapers, to request the discount on the agreed retail price on orders with invoices dated from 1 February.

In the letter, seen by the publication, Asos chief commercial officer José Antonio Ramos, wrote: “In recent months, we’ve absorbed the effects of inflation and worked to offset it as far as possible through our own internal cost saving initiatives. We know that inflation will have impacted you, too. 

“While we continue to absorb most of the effects of inflation, we now must work with you to some of share the burden and put in place measures essential to maintaining competitive prices for our customers.”

READ MORE: Asos takes a hit from Omicron as supply chain costs soar

Asos’ sales and profits were dented over the key Christmas trading period, with revenue up just 2% to £1.4 billion and gross margin down by 400 basis points to 43%. The margin decline was driven by heightened clearance activity to shift “slow-moving” spring/summer 21 stock, elevated freight costs, and the “use of air freight to circumvent supply chain constraints and maximise peak trading”.

Asos also revealed last month that it had increased prices in the “low to mid-single digit” range to mitigate against cost rising in the business.

To ease the burden on its suppliers, Asos has agreed to reduce its payment terms for some suppliers from 60 to 45 days.

Asos last week listed on the main London Stock Exchange, which made the fast-fashion giant eligible for the FTSE 250 index. The etailer has a market capitalisation of £1.96 billion.

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  1. Just over 2.5 years ago it was to ‘repair finances’ now ASOS is back seeking discount from suppliers to offset ‘rising inflation’. Leaving aside consistency suppliers must now choose between maintaining a relationship with ASOS or calling its bluff. Meanwhile:
    1. how will credit reference agencies react?
    2. Will other #fashion brands follow ASOS in also seeking “discounts”?


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