ONLINE fashion retailer Asos has announced the immediate departure of its chief executive and issued a profit warning while also saying it expects pressures from its supply chains to run into next year.
Shares in the company dropped 14.5 per cent to 2,379p at one stage following the news, and closed at 2,408p which as a drop of 13.41%.
The company told the City Nick Beighton is stepping down from the role he has held for six years, before a successor has been found.
The business is also facing headwinds from the cost of freight, Brexit duties, delivery costs and increasing salaries.
The company said its pre-tax profit will be a lot lower in the 2022 financial year than in its most recent year, which ended in August.
On an adjusted basis, pre-tax profit is expected to fall from £193.6 million to somewhere between £110m and £140m.
Asos (As Seen On Screen) said there are several reasons for this, including that last year’s figure included what it called a “Covid-19 benefit” of £67.3m because fewer clothes were being returned by customers.
Leisurewear, which proved popular during the pandemic, is less likely to be returned than more formal clothes, it said.
Returns are already normalising, so this benefit is expected to disappear, Asos also said.
It added that it expects the 1.4 million new customers it attracted in the last year and others throughout the pandemic will be more likely to send clothes back.
Without adjustments, pre-tax profit had risen 25% to £177.1m in the 12 months to the end of August. Revenue grew by a fifth to £3.9 billion.
The number of active customers increased 13% to 26.4 million.
Mr Beighton said in a statement: “I have enjoyed every moment of my 12 years at Asos. When I joined, there were fewer than 200 people and we had annual sales of around £220m. I leave a business reporting turnover of almost £4bn, with more than 3,000 fantastic Asos-ers delivering for 26 million customers in 200 markets around the world.”
He will be available until the end of the year if the board needs his advice, but day-to-day running of the business will be handed to current finance chief Mat Dunn.
Ian Dyson, a veteran of Marks & Spencer and Punch Taverns, will take over as chairman from Adam Crozier, who is stepping down to join BT Group.
The new leadership will have to contend with problems across global supply chains, which the company believes will last throughout the first half of its financial year, which ends in late February.
The problems have hit millions of businesses around the world. For Asos they have meant that supplies of some of the brands it sells online have dried up, and shipping costs have risen.
Mr Dunn said the company expects particular “supply constraints” in the peak Christmas trading period.
He said: “There are a litany of supply challenges but the main issue for us is how we get items from around the globe to customers when there is disruption to shipping and air freight.
“We are working with the space available and everyone has the same issue – it isn’t just fashion, we are against everyone trying to get their products delivered.”
He said it aims to become a £7bn business “within three to four years”.
Russ Mould, investment director at AJ Bell, said: “The scale of the problems at Asos appear to have been underestimated but the company parting ways with its chief executive is less of a surprise.
“The near-term outlook is somewhat bleak for Asos. Sales growth is expected to slow quite dramatically; cost pressures and supply chain problems could remain intact for a while, which means profit margins will be squeezed, and consumer uncertainty could result in volatile trading patterns.”