Asos boss exits as fast fashion retailer warns on profit

CEO unable to commit to staying with group for at least half of next five-year plan – chairman

Asos  parted ways with chief executive Nick Beighton as it warned that 2022 profit could fall by over 40 per cent. Photograph: Suzanne Plunkett/Reuters

Asos parted ways with chief executive Nick Beighton as it warned that 2022 profit could fall by over 40 per cent. Photograph: Suzanne Plunkett/Reuters

 

Asos, the online fashion retailer, parted ways with chief executive Nick Beighton on Monday as it warned that supply chain pressures and consumers returning to pre-pandemic behaviour could reduce 2022 profit by over 40 per cent.

Shares in Asos, which sells fast-fashion aimed at twentysomethings, were down 13.5 per cent at mid-afternoon trading, extending a decline this year to 50 per cent.

Mr Beighton had been with Asos for 12 years, including six as CEO, and the company said his immediate departure would enable it to find new leadership to accelerate international growth and deliver £7 billion (€8.3 billion) of annual revenue within four years.

Asos had performed well through the pandemic but warned in July that growth had slowed.

Chairman Adam Crozier said Mr Beighton would not commit to stay at Asos to see through at least half of its next five-year plan.

“In that conversation with Nick over the last little while, we’ve sort of just come to the view jointly that he’s not going to be around for all of that, therefore it’s better to make the change now,” Mr Crozier told Reuters, adding this year’s share price fall was “unhelpful”.

Finance chief Mat Dunn will take on the additional role of chief operating officer and lead the business on a day-to-day basis while a new CEO is sought. Katy Mecklenburgh, currently director of group finance, will become interim chief financial officer.

Ian Dyson, Asos’s senior independent non-executive director, will become chairman on November 29th, succeeding Mr Crozier, who, as previously announced, is becoming chairman of BT.

“While our performance in the next 12 months is likely to be constrained by demand volatility and global supply chain and cost pressures, we are confident in our ability to capture the sizeable opportunities ahead,” said Mr Dunn.

Supply chain

Asos reported a 36 per cent rise in year to August 31st adjusted pretax profit to £193.6 million, driven by a £67.3 million boost from the pandemic when shoppers bought leisurewear, rather that partywear options for a night out, some of which were then returned. Revenue rose 22 per cent to £3.91 billion as its active customer base increased 13 per cent to 26.4 million.

For the new 2021-22 year, Asos forecast an adjusted pretax profit of £110 million to £140 million, as customer returns normalise. Taking the mid-point of the range, that is 35 per cent below analysts’ average forecast of £193 million prior to Monday’s update.

Sales growth was forecast in the range of 10 per cent to 15 per cent. Analysts had expected 20 per cent.

Asos warned that supply chain pressures that have hit the movement of container ships and trucks globally during the pandemic were expected to continue through the first half, resulting in longer lead times and constrained supply from partner brands.

Asos also faced higher inbound freight and outbound delivery costs, Brexit-related duty costs and labour wage inflation.

Last month shares in rival Boohoo fell 12 per cent after it reported a slowdown in growth and warned on full-year profit.

Asos said it plans to double the size of its combined US and Europe business within four years and add at least £1 billion to the group’s annual own brand sales.

“If we do the right things and we execute there, then the share price should take care of itself,” said Mr Crozier. – Reuters