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Fast-fashion brand ASOS to revamp operations amid declining profits

Fast-fashion brand ASOS to revamp operations amid declining profits

British fast fashion retailer ASOS’s new CEO, José Antonio Ramos Calamonte, has reportedly vowed that the brand will overhaul its business model after its profits slumped due to the economic downturn and operational issues.

Calamonte stated that the company, whose shares plunged 80% this year, will address the unsatisfactory returns from its international orders, especially from the US.

The CEO also stated that the firm will improve upon its inefficient supply chain, better utilize its data, come up with new ways to reengage with its target market, reduce costs, and refresh company culture.

Calamonte would also be focusing on simplifying business and making it more flexible and resilient in the coming year. The company wants to deliver relevant stock quicker to its customers.

Both ASOS and its competitor Boohoo saw a boom in sales as young consumers were attracted to their fast fashion, especially during the pandemic when their high street rivals were shut down.

However, with major supply chain disruptions, growing competition, and a sharp economic crunch, their business models were badly affected, combined with the consistent problem of handling customer returns.

Boohoo has already issued a warning regarding its outlook for September.

Meanwhile, ASOS’s adjusted pretax profit in the 12 months to 31st August came at £22 million ($25 million), which was similar to the guidance that had been lowered last month, but still down from the £193.6 million ($217 million) made the year before.

The retailer has warned of a loss in the first half of next year as it offers discounts to clear stock, in need of a non-cash write-off of nearly £130 million ($146 million).

In H2, ASOS will start operating with lower stock levels given the lead time on deliveries and orders, adding that it will benefit from lower freight rates and cost cuts.

Calamonte further stated that the company has cash and committed facilities of over £650 million at year-end, meaning that it has enough margin for maneuvering and does not require another equity raise.

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Meghna Singh

An English Literature graduate, Meghna Singh ventured into the profession of content development to incorporate her knack for writing articles across verticals including technology, healthcare, business, and alike for News Origins and Newsorigins. She has also completed her MBA in Tourism and worked as a content creator in the field of product development.