Retail Economics: ASOS profits under pressure as stock availability plagues operations

Commenting on ASOS financial update, Richard Lim, CEO, Retail Economics, said: “It’s clear that supply chain issues continue to plague the retailer who is putting on a brave face as they continue to battle ongoing challenges to the business. Although growth hit their cautious sales expectations, profits came under pressure as the retailer battled stock availability and rising costs. International sales also remained fraught with difficulty against the backdrop of elevated risk and dislocated deliveries. 

“The UK business did show growth against tough comparisons from last year, but the upcoming squeeze on discretionary income will hit their core target market making for a challenging second half to the year. The combination of rising inflation, an increase in NIC and the energy cap rise will bite down on spare cash, particularly for the least affluent and the ’20 somethings’ that the retailer actively targets. 

“Coming out the other side of the pandemic, the online environment has become increasingly competitive. An intense period of investment throughout the pandemic across the entire digital ecosystem has meant that many previously uncompetitive retailers have raised their game. Faster, cheaper and easy returns have become near minimum requirements for many consumers and the range of retailers meeting their expectations has significantly expanded in the last couple of years.”