ASOS: What Do Their Latest Results Mean For The Future?
As part of our news service, we often look at the financial reporting and performance announcements from major fashion and retail brands. As a clothing photography service, this is vital to our understanding of where the market is moving to and potential trends to monitor. However, it is sometimes useful to go into more detail about individual brands and explore what the outlook is when compared to others.
This article will focus on ASOS, their recent results, comparisons with competitors and reflections by experts on what action should be taken.
The key financial detail
Looking at the headline figures from its recent financial report, ASOS has seen a drop in sales of 7%, down to £1.84 billion for the six months leading up to the 28th of February 2023. Furthermore, pre-tax losses grew from £15.9 million in 2022 to £290.9 million. For a business that has grown in just over 20 years to be worth approximately £900 million, this British industry success story faces a crossroads.
It should be noted that ASOS has stated that a significant portion of their recent losses is down to inventory write-off, worth £130 million. Added to this, it should be noted that ASOS was once valued at more than £5 billion.
With sales down in almost all markets of the world, including a drop of 10% in the UK and 7% in the US the cost-of-living crisis is clearly impacting results alongside reduced marketing and product availability.
What are their competitors doing?
One intriguing method for assessing how ASOS should be focusing their efforts is to look at the way competitors are doing things differently. One key rule is clear for everyone to see and that is the need to focus the attention of potential customers on specific ranges, items and brands. You can’t market everything, to everyone.
Zara & H&M
At Zara, they try to focus on different collections that have distinct differences so that when they appear, there is a specific appeal and drive to get the attention of customers. H&M have combined making their stores easier to navigate with specific collections that focus on an excellent product that they knew customers would want.
Boohoo
Having suffered similar challenges to its online retailer rival, Boohoo has created its own vision for the future. Whilst not necessarily going for specific ranges, they have gone for a bold and ambitious approach.
What can ASOS do next?
As a clothing photography service, we often discuss the goals, vision, brand and direction of a fashion client. Without this, how can you bring that vision to life and this is also true of ASOS. They need to stop simply trying to fix problems and start to plan a future that is full of growth, excitement and change.
ASOS is still a huge brand and fashion business, with successes mixed in with the failures highlighted above. Will it find a route through 2023 into a more successful business model or could other brands be tempted to target it as part of their acquisition strategy? The next few months should tell us more.
