ASOS identifies cost savings after Christmas sales slide

By Sarah Young

LONDON (Reuters) - Online fashion retailer ASOS said operational changes would help deliver a 300 million pound benefit to its current financial year, giving the group a much-needed lift after sales fell over Christmas.

José Antonio Ramos Calamonte, ASOS's chief executive who took over last year, wants to overhaul the company's business model and win back its 20-something fashion-conscious customers after profits dived following the end of pandemic restrictions and due to a string of operational problems.

ASOS said sales in its biggest market of Britain fell 8% in the period, hurt by Christmas delivery problems and a tough comparison against last year when the pandemic favoured online shops.

ASOS said in its statement on Thursday that it had found profit optimisation and cost saving measures which could benefit its current financial year by more than 300 million pounds ($364.35 million) from moves such as removing unprofitable brands and winding down storage facilities.

The stock gained 14% on the promise of those improvements, rising to levels last seen in November, but it has still lost 70% of its value over the last 12 months.

Liberum analysts called recent trading weak, adding there had been "progress on new strategy but we remain wary."

Britain is in the midst of a cost-of-living crisis and ASOS blamed weak consumer sentiment for its UK sales fall but many other retailers, such as clothes chain Next, have managed to grow sales over Christmas, showing that ASOS is more challenged than others.

Britain's delivery network was hamstrung during the final months of 2022 by more than a dozen days of postal walk-outs, prompting shoppers to prefer to shop in store than worry about deliveries.

The end of the pandemic has also helped physical stores. Data from IMRG showed that online retail sales in the UK fell for the first time ever last year, down 10.5% year-on-year.

In Europe, ASOS did better, growing sales more than 6% in the period.

($1 = 0.8234 pounds)

(Reporting by Sarah Young; Editing by Kate Holton)