Asos announces slump in revenue and mothballing of Lichfield warehouse
Asos has said its revenue slumped in the last financial year as it became a smaller but, it said, a more resilient business and decided to mothball one of its UK warehouses.
Revenue fell by 10% to £3.5 billion in the year to the beginning of September.
The online fashion seller said it needed to get “back to fashion” as it targets a market of 20-somethings who like shopping for clothes.
But the business has also been on a mission to reduce its stock and costs and improve its profitability.
We’re working very closely with our partner to make sure that as many as possible are relocated
Chief executive Jose Antonio Ramos Calamonte
Over the last year it has reduced stock levels by around 30% and plans another 16% cut in stocks over the next financial year.
Having less stock means that large parts of a warehouse in Lichfield, Staffordshire, have sat empty, prompting the business to announce it would mothball the site.
It will save Asos around £20 million a year and also give the company the opportunity to sell it off, or reopen it again in the future if the business thinks it is needed once more.
A few hundred people work at the site, said chief executive Jose Antonio Ramos Calamonte, although they do not directly work for Asos.
“That doesn’t mean that a few hundred people will lose their jobs immediately,” he said on a call with reporters. “We’re working very closely with our partner to make sure that as many as possible are relocated.”
Mr Ramos Calamonte also announced another £30 million for the company’s marketing budget to attract the 20-somethings that he wants to be buying his clothes.
He said that in times of crisis like now when the cost of living has soared, shoppers focus on the big moments like Black Friday or Christmas.
The business has moved to ensure that it can get products from the design stage to customers as fast as possible.
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In the past the delay between having a product on a drawing board to seeing it in Asos warehouses could be around two months. Now it is trying to have a significant number of products do that same journey in just two weeks.
“We have taken to the limit how fast we can go to the market. We have revisited everything we do to make sure that waiting for a minute is worth it,” Mr Ramos Calamonte said.
It has meant working with suppliers that Asos can trust to take their own decisions about the products, he added.
