Asos to take £14m hit after halting sales in Russia

A stream of brands and companies have pulled their business out of Russia since the invasion of Ukraine

The retailer says it was ‘impossible to serve customers’ in Russia after invasion of Ukraine (AFP/Getty)

Asos has revealed that it expects to take a £14m drop in revenue as a result of its decision to withdraw sales in Russia.

The online fashion giant said it sank to a pre-tax loss for the six months to the end of February and has spent heavily on an overhaul to win more long-term customers.

Asos suspended sales in Russia in early March, after Vladimir Putin launched a full-scale invasion of Ukraine on 24 February.

The retailer said it became “impossible to serve customers there” immediately after the invasion, adding that it decided it was “neither practical nor right to continue to trade in Russia”.

Asos joined a stream of other brands and companies that have halted sales in Russia over the war, including Nike, Chanel, Hermes, Prada, LVMH, Apple and McDonald’s.

Sales have been impacted by global supply chain disruption and limited stock availability. Asos bosses also said they saw a marked slowdown in sales during the six months to the end of February as shoppers headed back to the high streets instead of shopping online.

Sales still rose by 1 per cent to £2bn in the six-month period, but a £106.4m pre-tax profit in 2021 turned to a £15.8m pre-tax loss.

Further losses were attributed to £30.6m spent on upgrading the business, including its £6.4m takeover of Topshop and £18.3m relating to its Hertfordshire office.

The company is 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: “Asos has delivered an encouraging trading performance, against the continuing backdrop of significant volatility and disruption.

“We’ve entered the second half of the year well placed, and believe that our stock position, with increased product availability and newness, will stand us in good stead.”

In the UK, Asos sales grew 8 per cent to £895.5m, despite the company admitting that it missed out on sales for events in January.

Bosses said that it had a strong Christmas period in spite of the Omicron variant of Covid-19 causing uncertainty.

Sales in Europe were up one per cent to £577.4m, where there was greater impact from supply chain problems and Covid-19 restrictions, particularly in France.

Meanwhile, sales in the US rose 11 per cent to £252.7m. The company is hopeful that it will win new business there, with the launch of two physical stores and plans for two new “retail concepts” in February.

Additional reporting by PA