Asos swings to loss and predicts further £14m hit from Russia exit

Asos has revealed its pre-tax profits fell 115% year-on-year from £106.4m to a pre-tax loss of £15.8m in the six months to 28 February 2022 (H1 FY21). 

The company also said it is expected to take a further £14m hit following its decision to suspend sales in Russia, with revenue growth expected to drop 2%.

The announcement comes as Asos reported 1% revenue growth to £2bn in H1 FY21, as supply chain constraints impacted newness and stock availability and ongoing Covid restrictions impacted demand. 

Asos said its fall in profits reflect costs of adjusting items which total £30.6m. However, despite reduced stock availability impacting growth across all regions, both the UK and US delivered a “strong” performance with +8% and +11% sales growth respectively, although sales in the EU “remained subdued” at 1%.

In the UK, sales grew to £895.5m despite lockdown restrictions. The supply chain constraints and Omicron-related uncertainty further impacted growth around big sale events in January.

Meanwhile, demand for going-out wear continued its recovery despite Omicron uncertainty over the Christmas period, and has been further supported by the removal of all Covid restrictions in February.

Overall, active customers increased by 0.3 million since year end to 26.7 million, reflecting 7% growth year-on-year, with Premier customers growing by 24% year-on-year.

Asos said that despite the external challenges, sales growth is expected to accelerate in the second half, due to the improved stock position, the easing of the comparative growth rates, the return of event and holiday-led demand, increased marketing investment to accelerate international sales, and an improved delivery proposition as supply constraints ease.

Save for the removal of Russia’s contribution to H2 following the decision to suspend sales, Asos is maintaining guidance for the full year.

Mat Dunn, COO and CFO, 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. We remain mindful of the potential impact on demand from the growing pressures on consumer spend and will continue to be responsive to any changes in market conditions.”