Asos: how the brand went from fashion favourite, to the bargain bin

Four years ago, investors were scrambling to invest in Asos. The fashion marketplace surged in popularity following the closure of high street stores during COVID, and millions of us Brits spent our newfound free time scrolling through a kaleidoscope of t-shirts and shorts.

In 2024, the brand has fallen out of style. March’s results show an 18% drop in sales year on year for the first six months to 3 March, totalling an underlying pre-tax loss of £120m.

Asos is blaming output. Referencing the “sub-optimal newness” of its stock, it is now targeting faster delivery of product lines to rival fast fashion titans. It is also demanding staff return to the office, warning that remote work is “detrimental” to company performance.

Below, we’ll go behind the counter and into the stockroom to delve into what’s happening at Asos, and whether the website can redress to impress this year.

Stuck with stock

Asos first arrived on the catwalk in 2000 as As Seen On Screen. Flogging versions of clothes sported by celebrities, its tagline was, “Buy what you see on film and TV”.

The excitement of the emerging ecommerce trend immediately propelled Asos upwards. After launching a womenswear brand in 2004, the retailer began to add bigger labels to its wardrobe, such as Nike. It became a virtual high street for early internet consumers.

Fast forward 24 years, and (like the real, struggling UK high street) Asos has stalled. It now stocks over 850 brands and boasts an infinite product aisle in the tens of thousands.

That has led to an overstuffed inventory desperate for a clean out. Even today, despite the mild June weather, the brand has over 4,000 coats and jackets for sale on its website.

In an effort to “facilitate the right sizing of stock”, Asos has begun scaling back. Last year, it shuttered its Staffordshire warehouse, in a bid to save around £20m per year.

In April, it said it had cut its intake of new stock by 30%, and would sell off discounted old stock to achieve the “right level of newness to excite customers” in its clothing lines.

Faster fashion

Ten years ago, Asos’ production cycle for new stock wouldn’t have been described as slow. But the goalposts have been moved by the arrival of larger, fast fashion brands such as Shein and Temu, both of which have had huge success in the global ecommerce market.

It can take up to four weeks to deliver a new item at Asos. Shein is reportedly able to “design”, produce, package, and distribute products in under 3 days. Unlike the former, Shein produces each item in small quantities, so it cannot be weighed down by old stock.

Whether this supply chain is ethical (Shein has faced multiple allegations of worker abuse and exploitation) is a matter of opinion. It is certainly not environmentally friendly. Research indicates that 64% of the 34 million items produced by the industry will end up in landfill.

To buyers, it doesn’t seem to matter. While Asos’ sales have faltered, Shein’s have soared. This month, the brand confirmed plans to go public, with an estimated value of £51.7bn.

In answer, Asos is scaling its “high-fashion” two-week delivery programme ‘Test & React’. Currently, Test & React makes up less than 1% of sales. Asos plans to grow this to 10%.

Flexible working

To deliver a high output of products, Asos needs a crack team who are working at optimum efficiency. According to the company, that requires a clamp down on flexible working.

Asos is one of the many companies that have demanded remote staff return to the office for at least three days a week, and in some cases, five. This week, it warned workers about the “detrimental” impact of virtual meetings on business performance.

The retailer has threatened disciplinary action if employees are found to ignore the policy, stressing that project planning, brainstorms, and commercial meetings are “vital” to attend.

Whether office attendance improves output is up for debate. Manchester United owner, Sir Jim Ratcliffe has argued that remote staff are less productive, citing email statistics as proof.

Others are less sure. Also this week, Mark Mullen, CEO of Atom Bank, said that RTO mandates cause “rebelliousness” among employees, which could stoke workplace conflict and have the opposite intended effect for Asos.

The enigma of Gen Z

Also a concern for Asos is its ability to target the next generation of shoppers, Gen Zers. It’s a problem that has plagued other legacy brands from the early noughties, such as Superdry.

In fairness to retailers, Gen Z, those who are currently aged 16-26, are hard to pin down. They claim to love sustainable resell platforms, for example Vinted and Depop, but have also been drawn to the super on-trend, fossil-fuelled Shein and Temu.

Asos needs to position itself as a brand that answers both of these demands. Social media could be the answer. Platforms such as TikTok and Instagram have allowed traditional brands like Marks & Spencer to become a surprise hit with younger audiences.

It’s a marketing tool that Asos has begun tapping into. In February, it increased its marketing spend by £30m and relaunched its influencer marketing campaign, ‘Asos Insider’.

With a new advertising strategy comes a brand refresh. Asos has also shuffled its leadership team to bring some new ideas to the boardroom.

In December, menswear product director Stefan Pesticcio left the firm after 17 years, alongside Asos brands director James Barron.

At the time, an Asos spokesperson told Retail Week: “This is part of a wider change to our product teams which we’re incredibly excited about.”

New season for Asos

With a revived product development process, a more focused marketing strategy, and having shed the weight of its bloated stockroom, Asos is debuting a new look in 2024.

CEO Jose Calamonte’s turnaround plan has already generated wins. Shares in Asos rallied 10% in April. Emboldened, the company says it is now expecting growth.

Still, in today’s market, caution is more attractive to stakeholders than lofty profit targets. Just ask other brands that have fallen on hard times, such as Cazoo. The car resale platform entered administration in May after failing to establish a sustainable business model.

Some edits will need monitoring. Leadership changes can be unsettling, and a stricter RTO mandate could cause similar unease among employees.

Asos might be seeking a sped up two-week production cycle, but it is wisely keeping its recovery timeline in the medium and long term.