Asos has cheered early signs that its overhaul is paying off while US tariffs loom and the retailer braces for new charges on cheaper imports.
The online fashion retailer said the first half of its financial year was the “strongest sign yet” that its turnaround of the business was working.
Its boss stressed that the firm was taking a “flexible approach” to fast-evolving global trade policy.
In particular, the company is set to be affected by US President Donald Trump’s plans to scrap the “de minimis” rule which means lower-cost goods shipped directly to US consumers are exempt from being charged customs duty.
Plans to axe this rule, which is set to take effect from May, means orders below 800 dollars (£602) will face new charges.
Asos’s finance chief Dave Murray said it does not tend to have orders that are over that cap so “it hasn’t really come into effect yet”, adding that the company’s “focus is making sure we have flexibility in our operations to continue providing our US consumers” with its products.
Asos recently closed its US warehouse in Georgia, and instead handles orders from American consumers from its warehouse in Barnsley, South Yorkshire, as well as a smaller local site in the US.
Jose Antonio Ramos Calamonte, Asos’s chief executive, said that since this change, “test and react” products had surged by 50% in the US, because they are available faster.
The test and react model, which is prominent for fast-fashion retailers like Shein, sees small batches of new-trend products brought to market more quickly.
Mr Ramos Calamonte said that regulation was changing “daily” with many details still unclear, meaning that the business was focusing on being “flexible and agile” as well as its approach.
He also said the firm was “not that deep into China” with about 5% of US sales of its own-brand products generated in China.
The escalating trade war between China and the US has seen Mr Trump confirm a 145% tariff on Chinese imports, while China reciprocated with a 125% levy on US imports.
“We have a very widespread supply chain… we are pretty resilient because we have a lot of different sources,” Mr Calamonte said, citing producers in northern Africa, Turkey, continental Europe, and the UK.
Meanwhile, Asos reported revenues of £1.3 billion for the six months to March 2, declining 14% compared with the same period last year.
It also warned that revenues were expected to come in at the “bottom end” of its guidance range for the full year, which means sales could drop by as much as 9%.
The decline has been driven by the platform clearing a build-up of stock and slashing the number of discounted items, focusing instead on selling products and new ranges at full price.
Asos’s own-brand products, sold at full-price, returned to growth during the period, while sales of its Asos Design range jumped by nearly a tenth in the UK.
“Our own-brand is doing better than our brand partners,” Mr Ramos Calamonte said.
“That is not a surprise, to be honest. We knew that, from the very beginning, in our new commercial model our own brands were going a little bit faster than our brand partners.”
However, he said some ranges were “selling really fast” such as collaborations with Adidas and New Balance, while Asos plans to add new brands to the platform like Good American and Pharrell Williams’ Ice Cream label.
The group narrowed its pre-tax losses to £241.5 million for the half-year, from £246.8 million a year ago.
On an adjusted basis, earnings before interest, taxes, depreciation and amortisation (EBITDA) swung to a £42.5 million profit, from a £16.3 million loss the prior year.
