The company cited weaker demand and delivery disruptions in its largest market, Britain, as the main reasons for the decline.
Rival Retailers Outperform ASOS in Christmas Period
Rival retailers, such as Next, have physical stores and outperformed ASOS during Christmas as consumers prioritized festive spending and chose to visit stores instead of worrying about delivery issues. ASOS also reported an 8% decline in UK sales during the period, which it blamed on weak consumer sentiment, earlier cut-off dates for Christmas deliveries, and a tough comparison against the previous year when the pandemic favored online sales.
ASOS CEO Plans to Overhaul Business Model
ASOS CEO José Antonio Ramos Calamonte, who took over last year, plans to overhaul the company's business model after profits dropped following the end of pandemic restrictions and a string of operational problems. This includes the delivery network being hamstrung during the final months of 2022 by more than a dozen days of postal walk-outs.
Online Retail Sales in UK Fall for the First Time
IMRG showed that online retail sales in the UK fell for the first time last year, down 10.5% year-on-year, partly because shops opened up after COVID-19 closures. This illustrates the challenge for online-only retailers such as ASOS. Despite the decline in sales, the company stated that it is making good progress with its plan to improve profitability, although it will lose in the six months ending March 2023. European sales grew 6% in the period.