Asos tumbles into red and warns of expected £14m hit from Russia boycott

Online fashion retailer Asos expects to take a £14 million hit from its decision to stop selling clothes in Russia.

The prediction came as the UK group, whose name stands for As Seen On Screen, revealed it sank to a pre-tax loss for the six months to the end of February, spending heavily on an overhaul to win over more customers longer term.

Sales still rose by 1 per cent to £2 billion in the six-month period but a £106.4 million pre-tax profit in 2021 turned to a £15.8m pre-tax loss.

The firm said it felt the effects of supply chain disruption and limited stock availability and expects the next six months to be more challenging due to inflationary pressures.

Asos, whose name stands for As Seen On Screen, was founded more than two decades ago and has grown to become one of the UK's biggest online retail success stories.

But bosses were hopeful that sales growth will accelerate this year, highlighting improvements in stock levels, a return of event and holiday-led demand and an easing of supply chain issues.

Losses were attributed to £30.6m spent on upgrading the business.

In the UK, sales grew 8 per cent to £895.5m, although the company admitted it missed out on sales for events in January.

Sales in Europe were up just 1 per cent to £577.4m, where there was greater impact from supply chain problems and Covid-19 restrictions - particularly in France.

Neil Shah, director at Edison Group, said: “One of the high-flyers of the pandemic, Asos’ [first-half] results send the online fashion retailer crashing back down to earth.

“Driving international expansion is a key priority for the fashion retailer and accessing new markets may well be crucial to compensate for pressures caused by a difficult environment in Europe.”

Matt Britzman, equity analyst at Hargreaves Lansdown, noted: “Profits are heavily down at Asos as the online shopping boom seen over lockdowns comes crashing back to reality.

“The broader online retail sector finds itself in somewhat of a sticky spot. With inflation at levels not seen for years the squeeze on finances will slowly start to feed into changing buying habits.

“On a positive note, the acquisition of Topshop looks to be a real asset and there are signs that the group’s push outside the UK has potential.”

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