Asos warns over profits as it unveils new bosses

The online fashion company slashed its outlook after seeing a sharp rise in order returns as customers rein in spending amid soaring inflation.

Online fashion firm Asos has warned that a cutback in spending aby shoppers amid the cost-of-living crisis will hit profits, as it announced a new chief executive and chairman (Asos/PA) (PA Media)

Online fashion firm Asos warned that a cutback in spending by shoppers amid the cost-of-living crisis will hit profits, as it announced a new chief executive and chairman.

The group slashed its outlook for sales and profits after seeing a sharp rise in order returns as customers rein in spending in the face of rocketing inflation, sending shares plunging by more than a fifth on Thursday morning.

It saw UK sales growth drop to 4% to £431.8 million in the third quarter to May 31 as returns rates rose, while total group revenues fell to £983.4 million from £987.9 million a year earlier.

It now expects full-year sales to grow by 4% to 7%, with underlying pre-tax profits of between £20 million and £60 million.

Chief operating officer Mat Dunn said: “What is now clear, based on the significant increase in returns rates that we have seen, is that this inflationary pressure is increasingly impacting our customers’ shopping behaviour.

“It is too early to tell for how long the current pattern of customer behaviour will continue but we are taking swift and decisive steps to minimise the impacts.”

Mr Dunn told reporters on Thursday that shoppers are buying as many items as before cost-of-living pressures, but have handed back more purchases for refunds.

He also cautioned that the company believes younger shoppers have been among the first to feel the brunt of surging inflation.

“Our position is that 20-somethings are more exposed than most because of lower levels of discretionary income,” he said.

“Also, this group is renting more and have seen rental prices increase significantly, so there are big pressures on these customers.”

The warning came as it promoted chief commercial officer Jose Antonio Ramos Calamonte to the top job and named non-executive director Jorgen Lindemann as chairman in a clean sweep at the helm.

Mr Ramos Calamonte becomes chief executive with immediate effect, taking on the role after former boss Nick Beighton left abruptly last October following a profit warning.

The incoming boss joined Asos from Portuguese retailer Salsa Jeans last year, where he was chief executive for almost two years, and was also previously in charge of the commercial strategy for brands including Zara owner Inditex.

Mr Lindemann will become chairman on August 1, taking over from Ian Dyson, who replaced Adam Crozier only last November.

Mr Dyson said: “Jose is the right person to lead Asos through the next phase of growth and the board is delighted that he is becoming CEO at such an important time.

“Since he joined the business, Jose has made an enormous contribution, driving change through our commercial function and bringing new energy and enthusiasm to the core product and trading functions of the business.”

Mr Ramos Calamonte said: “Asos is a great business with a strong brand, a compelling customer offer and great people.

“I joined Asos because it is a business I had admired for a long time.”

Shares in Asos were 29.5% lower at 815.5p after early trading on Thursday.