Profit Plunge for ASOS.com Amid High Hopes for the Future

There is no doubt that the pandemic hit businesses hard, with no where to dress up and go fashion in particular suffered from poor sales figures along with permanent store closures. Long established high street brands such as Debenhams, Topshop, Dorothy Perkins and Wallis closed their bricks and mortar stores to be bought out and operational online only. In amongst the all the doom and gloom and finding out who was next to fall into administration there were a minority of businesses that prospered. In April 2021, online fashion retailer ASOS.com reported a 275% leap in half-year profits, ASOS had their core audience at home and online and were quick to adapt to trends such as lounge and activewear.

Fast forward another year later to April 2022 and the story for ASOS has changed quite dramatically. As shoppers began to head back to the high street the brand saw a marked slowdown in sales, ASOS made a £15.8m pre-tax loss in the six months to the end of the February, compared with a £106.4m profit a year earlier. The business cited “industry-wide supply chain constraints impacting stock availability and ongoing Covid-19 restrictions” as the main contributing factor. The company also expect to take a further £14million hit from its decision to halt trade with Russia in response to the war in the Ukraine.

Despite all the plunging figures optimism remains buoyant at ASOS HQ. The company has been at the forefront of investment in core areas such as international operations (including the US market) and an established UK supply chain that can offer speed of response to in-demand products quickly and ethically. As seen within our own factory in north London ASOS have partnered with us, Fashion-Enter Ltd, and Kornit Digital to implement and showcase on-site textile printing capabilities to create a sustainable micro-factory concept. It’s this forward thinking, strategic planning that will keep ASOS ahead of the game. 

Retailers, physical and online, still have a minefield to navigate, with the price of international shipping increasing, rising living costs, ongoing covid outbreaks, staff shortages and concerns over ethical practices and sustainability.

Mat Dunn, COO and CFO, told DrapersOnline.com: “ASOS has delivered an encouraging trading performance, against the continuing backdrop of significant volatility and disruption. The team has acted with determination and pace and is making good early progress on the strategic plan for the next phase of growth, as set out at our CMD last year. While much remains to be done, we have a clear plan for each of the three key pillars – our platform, consumer offer, and international expansion – and are already seeing positive signs of progress across the business. We’re confident of the benefits these efforts will create and our continued ability to deliver.”

Fashion-Enter has worked closely with ASOS in both manufacturing and education for well over a decade and has seen firsthand that the company has the capacity to react and adapt to the ever-changing market and this will give the brand an advantage for those uncertain times ahead.