Asos has announced that it will close five warehouses and remove 35 unprofitable brands after a revenue decline of 3%, and UK sales drop 8% due to challenging trading conditions.

Asos claim the drop in sales was impacted because of national newsflow in September, and the disruption in the delivery impact in December. This led to earlier cut-off dates for Christmas and New Year deliveries, and ASOS reduced marketing spend in response. There was also a strong comparative period in December 2021, as the Omicron COVID variant boosted online retail. 

However, EU sales grew 6%, driven by improved basket economics supported by price increases, and customer growth, with the Netherlands and Ireland notably strong.

Whilst adjusted gross margin (excluding the impact of the previously announced stock write-off) was broadly flat (-10bps to 42.9%), actions taken on pricing and the reduced use of air freight drove an encouraging progression through the period relative to the prior year. Reported gross margin declined by 690bps to 36.1%. A significant improvement in gross margin is expected in H2 FY23.

CEO José Antonio Ramos Calamonte outlined key actions to drive rapid improvement in the Company’s operations. This included winding down three ancillary storage facilities (one in Europe, one in the UK and one in the US), optimising use of the Lichfield fulfilment centre to eliminate UK split orders and rationalising office space.

José Antonio Ramos Calamonte, Chief Executive Officer, said:

“We are undertaking necessary strategic and operational changes, with our focus shifting from prioritising top-line growth to building a more relevant and competitive fashion business with a disciplined approach to capital allocation and ROI. At the same time, we are working to reinforce our credibility as a leading destination for our fashion-loving customers. 

“We have made good early progress against a number of measures to simplify the business, including re-positioning our inventory profile, reviewing our operational model in our top markets and reducing our cost base. While there is more to do, I am pleased by the progress made in this period and am confident in the direction we are going. We retain ample balance sheet flexibility and reiterate our expectations for FY23.”