Asos has issued a warning that its sales are projected to decline by up to 15% in the upcoming year. This comes after the company reported a significant annual loss of nearly £300m due to delayed results being released.
Experts are concerned that the e-commerce fashion platform may require additional funding, possibly by selling its Topshop division. This is due to the fact that its net debt, which includes lease obligations, has increased from £533m to £648.5m in the span of a year.
The CEO of Asos, José Antonio Ramos Calamonte, stated that the company has achieved positive results despite facing difficult circumstances. He also mentioned that they will continue to introduce trendy products and enhance their brand.
The company intends to allocate an additional £30m towards marketing and expressed a desire to refocus on fashion with its products that are designed to evoke a sense of style and energy.
The Covid pandemic regulations being lifted has caused a decrease in online purchases for Asos, along with strong competition from other companies like Shein, H&M, and Zara, who offer both physical and online shopping options.
According to the recent Asos results released on Wednesday, sales decreased by 10% to £3.5bn in the year ending 3 September. Profits also took a significant hit, dropping from £32m to £296.7m compared to the previous year. The release of these results was delayed by one week from its original date.
Calamonte stated that getting rid of excess inventory in the upcoming year will continue to negatively impact sales and profits. Sales are projected to decrease by 5% to 15%, but the company anticipates decreasing their net debt by generating cash from selling off inventory.
According to him, Asos has made great strides in improving the profitability of the company over the past year. They are currently taking strong measures to clear out old stock and improve their speed in bringing new products to the market. Additionally, they are investing in their brand to remind customers of their primary focus on fashion.