The new CEO, Jos? Antonio Ramos Calamonte, plans to overhaul the fashion retailer's business model as shares are down 80% this year.

Britain’s online fashion retailer ASOS has announced it plans to revamp its business model after the operational issues combined with the economic crisis hammer its profits. The company’s shares are down 80% this year but the new CEO José Antonio Ramos Calamonte, stated that the company will address unsatisfactory returns from its international operations. Especially from the United States.

The CEO aims to improve ASOS’s “inefficient” supply chain, better leverage its data, find a way to re-engage its 20-odd customers, cut costs, and rejuvenate the firm’s culture. “Over the next 12 months I'll be focusing on simplifying the business and making it more resilient and flexible,” said Mr Calamonte.

On the market, shares rose 11% as investors cheered the shift and a fresh deal with lenders.

Both ASOS and its competitor developed rapidly as a younger demographic globally got hooked on their fast fashions. The demand even flooded during the Covid pandemic when high street competitors were closed.

However, the huge supply chain problems, the increased number of rivals and the quick downturn in the economy have massively affected its business model. The online retailer has also suffered drastically from the persistent problems of managing customer returns.

ASOS generated an adjusted pre-tax profit of £22 million ($24.9 million) in the year to August 2022, down from the pandemic surge of £193.6 million made in 2020/2021. It announced it would report a loss in its first half of the year as it slashed prices to off-load stock, forcing a non-cash write-off of up to £130 million.

The company will operate with lower stock levels in the second half because of the lead time on deliveries and orders. ASOS has not provided profit guidance for the full year. Before the update, experts forecasted an adjusted pre-tax profit of £61 million. Even though trading was volatile, September indicated a slight improvement relative to August and Mr Calamonte said he was not concerned by the threat of a takeover bid and did not worry too much over the share price.    

(Sources: investing.com, Reuters.com)