Asos in ‘intensive care’ after racking up a £290m loss

Asos shed almost a quarter of its value after it crashed to losses of more than £290million in the first half of the year.

On another bleak day for the fast fashion brand, shares fell 23.3 per cent, or 148.4p, to 487.4p, having peaked at 7730p five years ago and traded close to 6000p during the pandemic.

The slump came as the company reported a £290.9million loss for the six months to the end of February – far worse than the £15.8million loss in the same period a year earlier.

Asos also provided a more pessimistic forecast for a ‘low double digit’ sales decline in the second half of the year after seeing an 8 per cent drop in its first half.

Falling out of fashion: Online retailer Asos has been hammered as shoppers return to brick-and-mortar store

Analysts warned that Asos, which owns Topshop and Miss Selfridge, ‘remains in intensive care’. 

It has been hit by shoppers returning to brick-and-mortar stores after lockdown, while customers – typically aged between 16 and 35 – have reined in spending and returned masses of online orders amid the cost of living crunch.

But chief executive Jose Antonio Ramos Calamonte, who has set out plans to overhaul the firm’s ‘inefficient’ business model since taking over in June last year, insisted a change in fortunes was on the way.

He said the retailer was ‘starting to see the benefits of a repositioned stock profile’ and ‘taking action to reduce the proportion of our sales which are not profitable’.

‘I am very confident of our return to sustainable profit and cash generation in the second half of the year and beyond,’ he added. But analysts said the results were proof that there was no overnight fix.

Charlie Huggins, manager of the quality shares portfolio at Wealth Club, said: ‘The operational turnaround plan won’t be a quick fix – with Asos having a mountain to climb to rediscover its former glory.

‘For too long, Asos has had all the wrong priorities. The biggest problem was that it cared more about sales than the bottom line.

‘Asos is off the operating table, but it remains in intensive care.

‘It will be some time before the success of the recovery can be judged.’

In January, Asos said it would shut three storage warehouses in the UK, Europe and the US, while it is trimming some office space, but not closing sites.

Asos is also axing 35 unprofitable brands amid a wider overhaul to turn around its fortunes under Ramos Calamonte.

This includes better stock management, cost cutting, a review of its flagging international businesses and updating the group’s culture, including a leadership team reshuffle and new hires.

Asos has said it is cutting about 100 jobs to save about 10 per cent in staff costs.

This post first appeared on Dailymail.co.uk