Asos will ‘not ignore any option to grow’, says CEO

Asos’s full-year revenue for the 12 months to 1 September 2024 fell by 18% to £2.9bn, with operating losses mounting to £331.9m, which the business attributed to weakened consumer demand and “tough” competition in the fast fashion ecommerce space.

Asos share prices fell by 6% following the results publication this morning (5 November).

Despite falling revenues and mounting losses, Ramos Calamonte said he is “confident” in Asos’s online pureplay business model, refuting claims that the business is looking to bring back physical Topshop stores in the near future.

On 5 September, Asos sold a 75% stake in Topshop and Topman for £135m to form a joint venture with Heartland, which represents the Holch Povlsen family and their family business Bestseller. The transaction, which is expected to complete in Q4 2024, will see Asos retain a 22.5% stakein the former Arcadia-owned brands. The remaining 2.5% stake will continue to be controlled with Asos's existing partner, US department store chain Nordstrom.

The ecommerce pureplay trailed physical retail in the form of a central London pop-up shop opened last year in the run up to Black Friday.

Ramos Calamonte said: “We reconsider everything we do every day. We will not ignore any option to grow, and if that option in the future might include a physical presence, it certainly will not be discarded by no means.”

Ramos Calamonte remains hopeful that Asos is on track for growth after having “changed most of [its] processes”, including implementing a “test and react” drop-shipping model, in order to halve its stock levels from “close to £1.1bn in stock” in 2022 – when Ramos Calamonte replaced Nick Beighton as CEO – to £520m as of today.

“The vast majority has been cleared internally, which is how we turned stock into cash.

“[Clearing stock] is not something that happens fast. We have reduced 60m units, [which was] a massive challenge.”

The “test and react” model has met the end-of-year target of producing 10% of all products across Asos’s in-house brands, which in turn account for almost 50% of sales made through the platform.

“It's not a negligible amount of money that we are generating through that line,” added Ramos Calamonte.

“These changes are now real and are generating real benefits for the company, that gives me confidence that we are on the right path.”

Following the introduction of a £3.95 return fee for select “repeat returners” in early October, Ramos Calamonte said the business is already seeing improvement in return rates, which fell by 1% in four weeks since it was implemented.

The market remains “volatile” but consumer confidence in the peak trading period has improved compared to the same period last year. Asos is “well prepared” to handle the increased demand for occasionwear ahead of the party season, despite having shifted its focus to ready-to-wear in an effort to attract a wider range of consumers across all age groups, from teenagers to older millennials.

As National Insurance (NI) paid by businesses is set to rise from 13% to 15% from April 2025, the increase is “nothing” compared to “other ups and downs” felt by the business, as it continues to grapple with the negative impact of the cost of living crisis on consumer confidence, as well as rising competition from fast fashion giant Shein.

Ramos Calamonte concluded: “We continue to face cost challenges as we navigate each individual year.

“We’ve done a great job this year in reducing our costs across both our warehousing and our distribution costs [and] will continue to find ways that we can be more efficient.”