Asos to write off stock and cut costs as shoppers rein in spending on fashion

theguardian.com:

Asos is to write off more than £100m of stock and cut costs after diving into the red after its annual sales growth almost halted as shoppers hit by the cost of living crisis reined in spending on fashion.

The online fashion retailer said it had agreed a £650m banking facility to give it “financial flexibility” and was aiming to rearrange its operations by cutting costs, improving management of stock and “refreshing the culture” of the business.

It revealed that sales had risen just 1% to £3.94bn in the year to 21 August when it dropped to a £32m pretax loss from a £177m profit a year before. The group also said it had built up almost £153m of net debts compared with the year before when it held £200m of net cash.

Shares in the business slid more than 1% in morning trading following the announcement on Wednesday. The fall follows a plunge in Asos shares on Monday after it confirmed it was in talks with lenders over changing the terms of a £350m borrowing facility.

José Antonio Ramos Calamonte, the new chief executive of Asos, said the business had become too complex, allowed costs to rise too much and become “overstretched globally” so that it lacked scale in US, France and Germany.

He also said the group had become too reliant on discounting to attract shoppers as it had not invested enough in building awareness of its brand or developing new products.

The disappointing sales growth came despite sales at the group’s new Topshop brand more than doubling.

Asos will now buy its stock more frequently and closer to the time it will go on sale in an effort to ensure it has the right fashions.

Calamonte said the annual results were “resilient” but Asos could achieve “far more” and the retailer would “work resolutely to emerge from