UK’s ASOS to overhaul model after profit collapse at online fashion group

LONDON, Oct 19 (Reuters) – Britain’s ASOS (ASOS.L), the one-time poster child for the shift to online fashion, vowed to overhaul its business model on Wednesday after the economic crunch combined with a string of operational problems to hammer its profits.

With its shares down 80% this year, ASOS said its new chief executive needed to address international operations including in the United States, improve its supply chain, refresh its culture and find a way to re-engage its 20-something customers.

The British group, which has recently struck a new deal with its lenders, made adjusted profit before tax of 22 million pounds ($24.9 million)in the year to August 31 2022, in line with guidance that was lowered last month and down from the pandemic boosted 193.6 million pounds made in 2020-21.

It said it would report a loss in the first half as it slashes prices to clear stock, requiring a non-cash write off of 130 million pounds.

“Today, I have set out a clear change agenda to strengthen ASOS over the next 12 months,” Chief Executive José Antonio Ramos Calamonte said.

ASOS and rival Boohoo (BOOH.L) grew rapidly as young customers around the world snapped up their fast fashions, and demand surged again during the pandemic when high street rivals were closed.

But major supply chain issues, increased competition and the sharp downturn in the economy have badly affected its business model. The perennial problem of managing customer returns has also weighed on the business.

The new boss said the firm needed to address its international operations that have not lived up to expectations, particularly in the United States.

It also needed to review the way it acquires customers and its “inefficient” supply chain operation, better leverage its data and cut costs.

It said while trading was volatile September had showed a slight improvement relative to August.

($1 = 0.8851 pounds)

Reporting by James Davey; editing by Sarah Young and Kate Holton

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