A model in Asos clothing
(Picture: Asos)Asos is expecting to take a £14 million hit to profits as a result of its decision to suspend sales in Russia.
The online fashion retailer said the move, announced last month, would also reduce revenue growth by 2% this year given that Russian sales had previously accounted for around 4% of its business.
Its latest results showed that Asos swung to a £15.8 million loss in the six months to the end of February, which it blamed on “significant cost inflation” in both labour and freight as well as the end of Covid support measures.
Half year revenue grew 4% to £2 billion, although challenges related to the supply chain, such as maintaining stock levels, weighed on performance.
Asos forecast a bumpy six months ahead, as high inflation leaves consumers with less spare cash to spend on clothes, although it hopes the returns of holidays and nights out would boost sales.
Retail sales are already slowing. The latest BRC-KPMG sales monitor, published overnight, showed retail sales growth slowed to 3.1% in March, down from 6.7% in February. Consumer confidence “continued to sink”.
Asos acquired former Arcadia brand Topshop last year and the division was a bright spot in results/ Sales were up 193% on last year, driven by UK, US and German shoppers.
Mat Dunn, Asos’s COO and CFO, said: “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.”
Gemma Boothroyd, analyst at Freetrade, said: “ASOS is losing some steam. Its lacklustre first-half revenue and customer growth aren’t a disaster, but they sure don’t paint a picture of optimism either.”
Shares in the company have lost 69.4% of their value over the last year, but were trading 6.2% higher on Tuesday morning at £16.34.
