Asos has warned of lower profits this full year due to uncertain consumer purchasing behaviour and the continuation of higher return rates, with revenue growth expected to be 4% to 7% and pre-tax profits now expected to be in the range of £20m to £60m.
The announcement comes as Asos has named José Antonio Ramos Calamonte, currently chief commercial officer, as its new chief executive officer effective immediately and Jørgen Lindemann, non-executive director, as its new chair from 1 August 2022.
In the company’s trading update this morning (16 June), the company revealed revenues rose 4% year-on-year to £983.4m for the three months ending 31 May 2022, against a prior comparative growth rate of 47%, reflecting increased event-led demand.
Asos said that a “significant increase” in returns rates in the UK and Europe following inflationary pressures on discretionary spending is having a “disproportionate impact” on the company’s profitability.
Overall, UK sales rose 4% with a “strong” performance in occasion-wear amidst an uplift in demand driven by holidays, weddings and events partially offset by increased return rates. US sales also grew 15% due to strength of the Topshop brands, targeted promotional activity, and increased demand for going out wear.
However, EU sales declined 2%, with return rates trending above pre-Covid levels in some territories following inflationary pressures impacting purchasing behaviours. The rest of the world also saw sales drop 8%, although Australia returned to growth as delivery propositions improved and Premier was reactivated.
Mat Dunn, chief operating officer (COO), said: “At our half year results, we set out the actions we had taken as we faced a more challenging backdrop, notably the work undertaken in the face of the global supply chain challenges which led to an improved stock profile and increased newness and availability.
“What is now clear, based on the significant increase in returns rates that we have seen, is that this inflationary pressure is increasingly impacting our customers’ shopping behaviour.”
He added: “It is too early to tell for how long the current pattern of customer behaviour will continue but we are taking swift and decisive steps to minimise the impacts whilst continuing to deliver against the strategic initiatives we laid out in November that will ensure that Asos builds for the long-term.”