Asos confirmed its cost-cutting strategy will put some people out of a job.
The British fashion e-tailer said it’s taking steps to “reduce” roles among its workforce, which totaled 3,126 employees according to its 2021 annual report.
“Simplifying and reducing our cost profile is a core part of ASOS’ change agenda that was outlined at full-year results,” a spokesperson for the Nordstrom partner told Sourcing Journal. “As part of this, we have taken the tough but necessary step to outline proposals to reduce the number of roles across the business. We will work closely with those potentially affected to support them through the consultation process and will seek to redeploy colleagues wherever possible.”
The company has started a mandatory 45-day consultation period required by British law in which employers must meet with workers at risk of being laid off, Retail Week, a UK trade outlet, first reported Monday and estimated the reductions at roughly 100. Asos wouldn’t confirm the number of job cuts.
Sacking staff is one way Asos is trying reverse a financial freefall that saw it lose 31.9 million pounds ($35.8 million for the fiscal year ended Aug. 31, 2022. The e-commerce company is also working to better manage inventory and giving executive leadership a thorough review to be sure it has the right talent in place since former CEO Nick Beighton departed last yer.
Asos has no end of problems on its plate. It’s caught up in Competition and Markets Authority’s greenwashing probe which also targets Boohoo and George by Asda. Plus, customers are returning more of their purchases which eats into the company’s bottom line.
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Asos CEO José Antonio Ramos Calamonte recently admitted the company needs a better strategy for its “excessively capital intensive” and “too complex” international approach. The problem is that Asos isn’t showing “meaningful growth” in the U.S., France and Germany, he said. Right now the company is trying to cut back on promotions, shorten buying cycles and get product to market quickly so it doesn’t miss out on fast-moving trends.
The company is working with lenders to tweak its revolving credit facility amid concern that inflation will keep shoppers from spending freely on seasonal fashion through the holidays.
It’s still unclear how holiday shopping will shape up. For the half term school holiday that began on Oct. 23, U.K. footfall rose 8.2 percent from the prior week, according to Springboard. Foot traffic in shopping centers climbed 10.7 percent, while high streets saw an increase of 8.7 percent and retail parks improved 4.2 percent. According to the data firm, consumers “were clearly visiting retail destinations for experiential days out.”
Brick-and-mortar stores have been pulling out the stops to grab market share. Last year, Marks & Spencer overhauled its click-and-collect option to drum up foot traffic. This year, Primark is working to wrap up a “click-and-collect” trial ahead of a regional launch timed around the holiday selling season.