ASOS’s half-year results are as ugly as sin. Sales and margins are down, net debt has ballooned and pre-tax losses are getting a lot worse.
It’s all very well having a turnaround plan, but at some stage you have to show results and it feels like ASOS should have been delivering the goods by now.
AJ Bell’s Russ Mould said: “The company implies the economic backdrop has been unfavourable which has hampered its progress. It’s at times like these that consumers look for bargains which means ASOS’s decision to cut back on markdowns is somewhat ill-timed. Yes, it is prioritising profits over volumes, but it also needs to be in tune with what the consumer wants.
“ASOS has suffered in the past from having too much inventory and too much discounting, which has essentially made the customer associate the brand with cheap products. If it takes away the discount carrot then customers are going to turn their nose up and shop elsewhere. ASOS has been the architect of its own mistakes and is now paying the price.”