Business

Online fashion giants take hit from cost of living crisis

ASOS said iflation is taking its toll on sales with returns rising as consumers face more financial pressures.
Emma Deighan

ONLINE retail giant ASOS's new trading statement has laid bare the impact the cost-of-living crisis is having on the business.

ASOS says inflation is taking its toll on sales as returns rise as consumers face more financial pressures. As a result it has adjusted its financial outlook. Guidance for the year has been updated with revenue growth expected to be four per cent to seven per cent and adjusted profit before tax (PBT) now expected to be in the range of £20 million to £60m.

It's a stark contrast to the guidance it published in January when revenue growth was expected to be in the range of 10 per cent to 15 per cent and adjusted PBT of £110m-£140m.

The company, which announced it was welcoming a second cohort of applicants for its Assured Skills Academy here earlier this year, also saw its UK sales growth drop to 4 per cent to £431.8m in the third quarter to May 31.

It attributed the drop to the increase in product returns.

Chief operating officer of ASOS, Mat Dunn, said the company could not anticipate how long current shopper habits would continue to impact its earrings, but he said the business was “taking swift and decisive steps to minimise the impacts”.

The company also revealed it has appointed a new CEO, José Antonio Ramos Calamonte. He previously worked for Portuguese retailer Salsa Jeans, where he was chief executive for almost two years, and was also previously in charge of the commercial strategy for brands including Zara owner Inditex.

ASOS is not the only e-commerce fashion name to take a hit from inflation.

Boohoo revealed a slump in sales over the past quarter.

Revenues there fell by 8 per cent to £445.7m over the three months to May 31, compared with the same period last year.

The retailer said UK sales nudged one per cent lower but it was particularly impacted by heavier declines elsewhere in Europe and in the US.

The group predicted that it will see low single-digit sales growth in the current year as it predicted "normalising consumer demand" in the second half of the year.

Its said supply chain costs has prompted it to source more products near to its retail markets to reduce freight and shipping costs.

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