Asos expects £14m hit to profits after halting sales in Russia

Asos expects to take a £14m hit to its profits and a 2% reduction in growth, following its decision to stop trading in Russia amid the invasion of Ukraine.

Russian sales had previously made up approximately 4% of its business.

The forecast came after the fashion retailer reported a £15.8m pre-tax loss in the six months to the end of February, compared with a £106.4m profit a year earlier as the company benefitted from the lockdown ecommerce boom.

Asos said sales in the UK grew by 8% to £895.5m over the period, and by 11% in the US. However, ongoing supply chain disruption caused reduced availability of certain items and prevented it from selling some of its newest lines.

The retailer’s share price was increased by 5% on Tuesday, following its half-year results announcement, at about £16.20. This time last year, its shares were trading at over £50.

However, sales had increased after company acquired Topshop and its brands were added to its website.

READ MORE: Asos among worst companies for gender pay gap

The ecommerce giant has issued a cautious warning in its outlook for the rest of the year, as consumers will likely spend less as the cost of living continues to rise.

Mat Dunn, Asos’ chief operating officer and finance chief – who is temporarily leading the company while it looks for a new chief executive – said Asos has reported increased costs throughout its supply chain.

“We have seen it in warehouse wages and the other area we have seen it reflected is in freight costs. They represent the vast majority of our inflationary pressures. We have chosen to absorb a significant amount of that in the short term,” Dunn said.

“We believe that ultimately some of those freight costs will unwind and so we have chosen to absorb them rather than pass them on to consumers.”

He explained the company had raised prices by a low to mid-single percentage in January, but not since.

“We’re making sure that our value proposition is as attractive to customers as it can be and we’ve definitely absorbed some of the inflationary pressures in order to do that,” he said.

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