ASOS takes £14m hit on Russia closure, absorbs higher costs
ASOS joined a host of major international retailers that have suspended retailing in Russia since the invasion began in late February.
While few have quantified how much of a hit the withdrawal will cost them in terms of profits and growth, ASOS has admitted it will cost the business £14 million this year and mean a 2% reduction in growth.
It joins Mothercare in revealing how big a hit it will see to its bottom line. Last month, the mother and baby goods retailer said Russian business represented around 20%-25% of its worldwide retail sales. And it was previously expected to contribute around £0.5 million every month to group profit.
Away from the Russia-Ukraine crisis, ASOS has also admitted it’s having to absorb costs as price rises begin the bite. This week, the company issued a note of caution in its outlook for the rest of the year, as shoppers are expected to cut back on spending amid rising inflation and the accelerating cost of living.
Chief operating officer Mat Dunn said the company had “chosen to absorb a significant amount [costs shock] in the short term,” after experiencing 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 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.”
However, he said the company had increased the price of some products by “low to mid-single digits” at the start of 2022.
Dunn also said he believed retail was going through “a period of realignment”, but that online shopping continued to account for a higher proportion of consumer spending than it did before the pandemic.
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