With the fashion retail facing a tough year, many brands have filed for bankruptcies and warned on lower than expected profits. Asos, a favourite online shopping destination for youngsters, has faced a rather difficult year.
The e-tailer had its share price more than halved as it saw its pre-tax profits take a huge plunge of 87 per cent in March when the company revealed its half-yearly results.
This has become a major cause of concern leading the brand to take some drastic steps. The company’s employees face the risk of losing their jobs as a result of the slumping sales.
Asos is expected to lay off around 100 people from its London head office, most of which will be from the marketing department.
The fashion e-tailer issued a profit warning in December, saying it had suffered a “significant deterioration” in pre-Christmas trading, which sent shares plummeting by around 40 per cent. Even with a slight pick-up in trading over the holiday period and into the New Year, Asos still reported a near 90 per cent drop in half-year profits in March.
Asos’ bid to enter the huge and potentially lucrative US market has also met with troubles. Earlier this year, the retailer opened a new distribution centre in Atlanta, but there wasn’t enough staff to cope with the demand, which was much greater than bosses had expected.
Back in April, the company began deactivating the accounts of customers it suspected were repeatedly abusing its free returns policy. “These guys are treating the Asos proposition sometimes, regrettably, as a rental service,” Asos Chief Executive Nick Beighton said. Apart from the jobs cuts, Asos is also looking to slash its costs by cracking down on serial returners.