Asos sees big loss as shoppers cut back on fashion

Online fashion retailer Asos has reported a big loss as its customers spend less on fashion due to the rising cost of living.

The firm saw a loss of nearly £32m in the 12 months to August, compared with a profit of £177m last year.

The firm expects shoppers to cut back further this year as living costs soar.

Inflation returned to a 40-year high in September as BBC research showed people are feeling increasingly anxious about their finances.

Asos, which owns Topshop and Topman, said it was facing "an incredibly challenging economic environment" at the moment.

"Within the UK, Asos expects a decline in the apparel market over the next 12 months but remains confident in its ability to take share against that backdrop," it said.

The retailer said it expected to make a further loss in the six months to the end of February, in part due to having to cut prices to clear stock.

Asos and its rival Boohoo, which were seen as a poster children for the shift to online shopping, benefited during the pandemic as locked-down shoppers splashed out online. But they have struggled as people have returned to stores.

Asos said in June that cash-strapped consumers were also returning more items bought online, hitting its profits.

he fashion retailer said it now planned to rebuild its once-successful business model, sorting out problems with its supply chain and refreshing its fashion ranges.

It also said it would focus on improving its US operations.

Chief executive Jose Antonio Ramos Calamonte said: "The team and I will work resolutely to emerge from these turbulent times as a more resilient and agile business."

Shares in Asos, which had slumped by 80% this year, climbed 12% on Wednesdayto regain ground lost over the past week.

Samantha Mansfield, head of strategy experience and commerce at consultancy Merkle, said Asos had not gone "unscathed amid the cost of living crisis".

"Even this giant retailer is no match for the financial struggles tightening the belt on the industry," she said.

"People know times are tough and brands across the board are struggling with sluggish sales and significant increases in returns."

Richard Hunter, head of markets at Interactive Investor, said Asos had "capped off a torrid year by swinging to a pre-tax loss as retail realities bite".

He said the news last week that Asos was negotiating fresh lending deals had been "taken as a sign of financial instability".

Mr Hunter added that the soaring cost of living coupled with "deflating consumer confidence" had hit its performance.