// Asos reports a drop in profits as it continues to struggle with supply chain challenges
// Losses were attributed to £30.6 million spent on upgrading the business
Asos fell into the red on an operating level as it suffered reduced stock availability due to supply chain disruption. The retailer made an operating loss of £4.4 million in the six months to 28 February, compared to a £109 million profit last year.
It made £14.8m adjusted pre-tax profit, down from £112.9m last year.
The retailer cited “industry-wide supply chain constraints impacting stock availability and ongoing Covid-19 restrictions” for the profits plunge.
However, over the half year Asos posted 4% revenue growth in constant currency to £2 billion.
Asos bosses were hopeful that sales growth will accelerate this year, highlighting improvements in stock levels, a return of event and holiday-led demand and an easing of supply chain issues.
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The online giant expects to take a £14 million hit from its decision to stop selling clothes in Russia, in response to the country’s invasion of Ukraine.
With the exception of the impact of its Russian business being suspended, Asos said its guidance remained unchanged. It previously has said it forecasts sales will grow 10% cent to 15% this year.
Chief operating officer and finance chief Mat Dunn said the retailer had delivered a buoyant trading performance “against the continuing backdrop of significant volatility and disruption.”
“While much remains to be done, we have a clear plan for each of the three key pillars – our platform, consumer offer, and international expansion – and are already seeing positive signs of progress across the business. We’re confident of the benefits these efforts will create and our continued ability to deliver.
“We’ve entered the second half of the year well placed, and believe that our stock position, with increased product availability and newness, will stand us in good stead. We remain mindful of the potential impact on demand from the growing pressures on consumer spend and will continue to be responsive to any changes in market conditions as we progress the work started in the first half to deliver on our ambitions.”
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