Asos sinks to loss and reveals £14m expected hit from quitting Russia

The online fashion giant said in March it would suspend sales in Russia after the invasion of Ukraine.

Simon Neville
Tuesday 12 April 2022 12:28
Asos said sales have increased but it struggled with supply chain problems (Asos/PA)
Asos said sales have increased but it struggled with supply chain problems (Asos/PA)

Online fashion giant Asos has said it expects to take a £14 million hit from its decision to stop selling clothes in Russia, in response to the country’s invasion of Ukraine.

The prediction comes as the retailer said it sank to a pre-tax loss for the six months to the end of February, spending heavily on an overhaul to win over more customers longer term.

Bosses said they saw a marked slowdown in sales during the period as the benefits from the Covid-19 pandemic eased with shoppers able to head back to high streets.

Sales still rose by 1% to £2 billion in the six month period but a £106.4 million pre-tax profit in 2021 turned to a £15.8 million pre-tax loss for the six months to the end of February.

Asos said sales have increased but it struggled with supply chain problems. (Asos / PA)

The retailer said it felt the effects of supply chain disruption and limited stock availability and expects the next six months to be more challenging due to inflationary pressures.

But bosses were hopeful that sales growth will accelerate this year, highlighting improvements in stock levels, a return of event and holiday-led demand and an easing of supply chain issues.

Chief operating officer and finance chief Mat Dunn said he was “really happy” with the group’s current stock levels following the period hampered by longer supply times.

“Our stock position is really good going into the second half of the year but there are lots of things we need to continue to do,” he said.

“Our availability on key products has improved since the first half and that’s down to a lot of hard work from our team.”

He added that shipping delays have reduced but freight costs still remain about five times higher than pre-pandemic levels and are one of the firm’s key inflationary pressures.

Losses were attributed to £30.6 million spent on upgrading the business.

These included £7.9 million on launching a new strategy for the fashion retailer, £5.5 million to move from the junior AIM stock market to the main FTSE stock exchange, £18.3 million relating to its Leavesden, Hertfordshire office and £6.4 million due to its takeover of Topshop.

Asos has delivered an encouraging trading performance, against the continuing backdrop of significant volatility and disruption

Mat Dunn, Asos

Mr Dunn said: “Asos has delivered an encouraging trading performance, against the continuing backdrop of significant volatility and disruption.”

In the UK sales grew 8% to £895.5 million, although the company admitted it missed out on sales for events in January, however, bosses said it had a strong Christmas period despite the Omicron variant of coronavirus causing uncertainty.

Sales in Europe were up 1% to £577.4 million, where there was greater impact from supply chain problems and Covid-19 restrictions – particularly in France.

And in the US sales rose 11% to £252.7 million, where bosses are hopeful of winning over new business.

This included the successful launch of two physical stores inside department store Nordstrom and plans for two new “retail concepts” in store in February.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

By clicking ‘Create my account’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in