Asos Profits Slump Shares Rise

16 Oct 2019

Asos Shares Grow While Profits Slump

Online clothing giant, Asos has reported a 68% drop in profits over the last year. Despite this, shares have gone up.

It is thought warehouse issues, as a result of expansion, are largely to blame for the blow to profits. The retailer has implemented big changes this year, including development of their US offering and the addition of more robots to their warehouses throughout Europe.

The company has admitted that the effects of their ambitious transformational plans were perhaps misjudged. A spokesperson for Asos said:

“With the benefit of hindsight, we were not adequately prepared for the additional complexities. The transformation has been huge and we underestimated the impacts of large scale operational change being executed on two continents simultaneously.”

As a result, the fashion retailer’s profits have fallen to £33.1m from last year’s £102m. However, overall sales have increased by as much as 13% throughout the year, totalling £2.73bn. Further to this, capital spend is predicted to drop by April next year.

Despite the slump in profits, investors in Asos appear to be encouraged by the figures. As of this morning, shares were up 17%. This will be welcome news to the company, who saw stock prices slashed by more than half earlier this year.

Asos are taking forward the lessons that have been learned from the last 12 months. The retailer has admitted that they let focus slip on key factors such as “product, presentation and customer engagement”. However, Chief Executive, Nick Beighton is confident: “We’ve got our eye back on the ball.”

As such, prices have been dropped and improvements have been made to the delivery service. They also assure customers that they now have better provisions in place for Black Friday and Christmas shopping, after a poor performance last year.

The retailer is also making changes to its staff structure, with recent executive additions and further new appointments on the horizon. These are to include a chief growth officer, chief commercial officer, chief people officer and a chief strategy officer, all of which are brand new roles within the business.

By Melissa Jones