ASOS profits slump – BinaryOptions

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ASOS profits slump

Published on October 31, 2020

Online fashion retailer ASOS has reported a significant downturn in profits after a disappointing last twelve months sparked by increased competition and a series of problems at the company that saw customers turning elsewhere.

Numerous Issues

The company placed the blame for these disappointing figures on problems with their warehouses both in Europe and the USA; ASOS spent millions installing more robots into their warehouses and expanded their facilities across the United States.

Newest numbers released by the retailer suggest a huge 70% drop in annual profits, with a reported intake of just £33m over the last year.

The company, which has generally stood well in the volatile fashion market, suggested that their sudden growth had not only negatively affected their profits, but also caused them to lose focus on their core customer base.

However, it hasn’t stopped customers from shopping: sales figures for the company were up by approximately 13% in the year, with certain fabrics and trends flying out of the warehouses for customers hungry to keep up with the fashion.

Manage Costs

Experts suggest that this change does not mean ASOS is struggling for customers but is perhaps unable to control mounting costs that eat into eventual profit margins.

Thanks to the rise of online fashion retailers, ASOS has emerged as something of a market leader in recent years, celebrating rapid growth over the last decade.

However, since December 2020, investors have been growing increasingly concerned that the bubble may be about to burst.

After a sudden profit warning handed to ASOS investors at the end of 2020, its stock price almost halved, though the shares have been seeing a steady rise in price over the last ten months.

After announcements from the company CEO’s decision to refocus the company on delivering quality for its customers, ASOS’s share price jumped up 17% in early trading.

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It’s difficult to predict just how ASOS will settle after this less than favourable profit report and comes as no surprise after the company announced in July that their predicted yearly profits would be at least £20m lower than originally forecast at the end of 2020.

ASOS profits slump – BinaryOptions

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Asos profits plunge in ‘disappointing’ year

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Profits at Asos have plunged after warehouse problems led to what the online fashion retailer said was a “disappointing” year.

Over the last year, Asos has installed more robots in its European warehouses and expanded its facilities in the US.

But the speed of growth hit profits, which dropped almost 70% falling to £33.1m for the year.

“With the benefit of hindsight, we were not adequately prepared for the additional complexities,” Asos said.

The company said it “lost focus” on key areas like “product, presentation and customer engagement”.

“The transformation has been huge and we underestimated the impacts of large scale operational change being executed on two continents simultaneously,” it said in a statement.

Despite the drop in profits, sales rose 13% in the year to the end of August. Animal print, broderie and satin styles had been particularly popular, the firm said.

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