Asos, the online fashion retailer, has reported large losses after shoppers cut back on spending and the cost of living squeezes household budgets.
The firm, which owns Topshop, posted a loss of £87.4m in the six months to the end of February, compared to a profit of £14.8m in the same period last year.
It said it’s trading had been “very challenging” with sales down 10% in the UK and 7% in the US.
But Asos said it was confident it would return a profit in the next six months.
The group, which announced a major restructuring in October last year, had previously said it expected to make losses, in part due to having to cut prices to clear stock.
But the latest losses came on top of £32m hit to the business revealed in its last full-year results.
Asos and some of its rivals have been seen as the poster children for the shift to online shopping. The company benefited during the pandemic as locked-down shoppers, mostly younger adults, splashed the cash online.
But with the reopening of High Street shops followed closely by the rising cost of living, spending power of customers has been a hit, with households having to deal with higher energy and food bills.
José Antonio Ramos Calamonte, chief executive of Asos, said despite the losses, he was pleased with the operational changes the company had made in the past six months in what he described as “some very challenging trading conditions”.
In the UK, Asos said while its sales were still above pre-pandemic levels, trading had been “volatile from month to month” and hit hardest notably in September, which it blamed on “negative news flow relating to the cost of living” and in December as a result of postal strikes.
Outside of the UK, US and Europe, its sales around the rest of the world dropped by 12% in the six months to the end of February.
Adam Vettese, an analyst at social investing network eToro, said Asos was unfortunate that the cost of living was hitting his target demographic of “fashion conscious twentysomethings”.
“Not so long ago, Asos was seen as the future of retailing in this country but it has been a long time since it has lived up to that tag. Ironically, online-only retailers such as Asos and BooHoo were meant to be the final nail in the coffin for bricks and mortar retailers, but the High Street is fighting back post-pandemic,” he added.