// Asos posts a £9.8m full-year operating loss blaming “supply chain disruption and macroeconomic challenges”
// New CEO José Antonio Ramos Calamonte unveiled his 12 month turnaround plan
Asos’ new chief executive José Antonio Ramos Calamonte has promised to “refresh the culture” at the online fashion giant after it plunged to an operating loss of almost £10m for the year.
Last year, made a £190.1m operating profit.
Calamonte unveiled his 12 month turnaround plan, which will focus on both a number of “decisive, short-term operational measures to simplify the business, alongside steps to unlock longer-term sustainable growth”.
The retailer will focus on renewing its commercial model and improving inventory management; simplifying and reducing its cost profile; ensuring a robust and flexible balance sheet; and reinforcing the leadership team and refreshing the culture.
The new CEO highlight issues such as Asos becoming “excessively capital intensive, too complex and overstretched globally”, which he said had resulted in “a lack of meaningful growth and scale” in its key international markets of the US, France and Germany.
He pointed out that its investment in a multi-region supply chain network in the US had “increased cost and complexity” and was not fully offset.
Therefore, it will revisit its approach to resource and capital allocation.
Calamonte also highlighted how Asos had historically underinvested in marketing and had focused more than 80% of spend on performance marketing, leaving insufficient spend on driving longer-term awareness.
He said that had led to it becoming increasingly reliant on the use of markdown and promotions as a tool to attract customers, which had resulted in reduced newness for customers and contributed to the erosion of gross margin in recent years.
Calamonte said the implementation of the new commercial model and structure will enable Asos to operate a shorter buying cycle, enhancing speed to market and improving curation.
“On the basis of the actions I have set out today, the team and I will work resolutely to emerge from these turbulent times as a more resilient and agile business – all the time guided by our purpose, to give our customers the confidence to be whoever they want to be,” he said.
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‘I know the company can achieve far more’
In results for the year to 31 August 2022, Asos said gross margins had been impacted by a supply chain “inefficient in the face of supply chain disruption and macroeconomic challenges”.
The retailer also forecast a first half loss in its new financial year.
The group, whose shares have fallen 80% this year, made an adjusted pre-tax profit of £22million in the year to 31 August, in line with guidance that was lowered last month and down from the pandemic boosted £193.6million posted last year.
The fashion retailer confirmed it is also in “the final stages” of renegotiating terms on its bank facility as it seeks a £350 million credit boost with financial lenders.
Calamonte said the business had delivered a “resilient” set of results despite “an incredibly challenging economic environment”.
He said: “Asos is a strong business with a compelling brand, customer offer and fashion credibility, with dedicated and passionate employees.
“Against the backdrop of an incredibly challenging economic environment, this unique combination has enabled our business to deliver a resilient performance this financial year in the UK – but I know we as a company can achieve far more.”
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