Following today’s release of ASOS’ figures for H1 FY2022/23; Pippa Stephens, senior apparel analyst at GlobalData, a leading data and analytics company, offers her view: “ASOS has continued along its downwards trajectory, with reported group revenue in H1 FY2022/23 falling by 8.2% to £1.8bn, alongside an operating loss of £272.5m, as economic and sustainability concerns inhibit the desirability of fast fashion and consumers shift back to physical stores. While the retailer has taken significant action to improve its outlook through its Driving Change agenda, which includes reducing product lead times, having fewer markdowns and promotions, and limiting the intake of stock, its guidance for H2 still looks bleak, with constant currency revenue excluding Russia expected to decline by low double-digits. ASOS has also likely suffered from decreased relevance among young millennials, as its designs have become more youthful in recent years and are better suited to Gen Z, so it should focus on widening its appeal again through featuring more versatile and sophisticated styles within its ranges.
“Revenue in its home market, the UK, declined 10%, with the region particularly hard hit by inflation, and the US stepped back 7% in constant currency, despite its expansion into ten further Nordstrom stores in the US in June 2022. Though this will partly be due to strong comparatives benefitted by stimulus payments boosting consumers’ disposable incomes, the department store’s wider struggles will have held back prospects of the partnership, with Nordstrom sales in Q4 FY2022 down 5.4% on 2019 levels, so ASOS should seek different partners in the region with more positive outlooks. Europe’s constant currency revenue remained flat, though its performance in the comparative period lagged, so the region is still weaker than the UK and US versus pre-pandemic. In February 2023, ASOS announced that it is expanding its Partner Fulfils programme in the UK and Europe, which allows brands to fulfil orders directly rather than through ASOS’ fulfilment centres. This will allow it to sell smaller local brands, which have greater relevance in ASOS’ European markets, hopefully aiding its growth in the region going forwards.
“In attempt to become more competitive within the online beauty sector, ASOS reported in March 2023 that it had expanded its Face + Body range to include 18 new brands over the past six months, and would be adding more in April and May to reach 210 brands in total. While it stated that this was in response to trends on social media, especially TikTok, it is also likely to have been a reaction to the launch of Sephora in the UK, which threatens to steal some of its beauty shoppers. ASOS also hosted experiential Face + Body pop-ups in London, Liverpool and Manchester that month, which will have helped to build awareness of its offering. To better its inventory position, the retailer also began partnering with the discount marketplace Secret Sales at the beginning of the year to clear through its stock, though it must ensure that it does not rely on the platform too much as it could risk tainting its perceptions.”
