Finance Monthly - November 2021 Edition

he departure of Nick Beighton from Asos as chief executive should not have come as a complete surprise. There are multiple reasons for his departure, culminating in the profit drop the company is expecting to see throughout the remainder of this year and into 2022. Asos had become a darling of the online sector, selling well over 850 brands globally and the share price had performed extremely well in the last year. However, the retailer had warned of slowing revenue growth and attracting increased costs related initially to Brexit, but with growing issues in the global supply chain becoming increasingly evident. All this was against a positive background of reported revenues accelerating to circa £1.3 billion for the four months to 30 June. This was well up on the £1.1 billion of like for like revenues of last year. The immediate impact of the pandemic on its supply chain, freight and associated indirect labour costs have started and will continue to dampen profits. The company reported that it still expected to meet annual profit expectations and not surprisingly the shares closed 18% wiping circa £750 million from its market valuation and thrusting it to its lowest stock level in almost a year. Reading behind this somewhat contradictory statement on expected annual profit, the group stated that the costs of shipping from China had risen ten-fold along with increased airfreight associated costs and further premiums now being incurred with fewer planes in the sky. It went on to state that Brexit had added two weeks to its existing supply chain between the UK and Europe. The company acknowledged that this was negatively affecting consumer anticipated delivery and one would ascertain that their existing systems were struggling to respond to these mounting changes on demand. What is concerning and illustrates in some part the downgrading in the share price, is that this was not factored in earlier in the company’s risk assessments as most other companies would have done in their strategic response, particularly with strong balance sheets. Nick Beighton initially said that customer prices for Asos had Finance Monthly. Bus i ne s s & Economy 41