ASOS asks for a 3% discount from its suppliers, as its profits continue to tumble

  • The British online fashion retailer ASOS is asking its suppliers for a 3% discount on all the clothes and accessories it buys from them, in an effort to repair its tumbling finances.
  • The company is blaming its overseas warehouses, although experts also believe that its recent US expansion is contributing to their falling profits.
  • ASOS told its suppliers that the move would “fuel joint growth” for both parties.
  • Visit Business Insider’s homepage for more stories.

ASOS, the online fashion retailer, has reportedly asked its suppliers for a 3% discount on all its incoming orders, according to a letter obtained bytrade magazine Draper’s.

The British fashion giant, which has been struggling to repair its finances, issuedtwo profit warnings within the last year. The share price has also dropped by more than 60% in 12 months.

ASOS is blaming IT problems at its Berlin warehouse for this, but experts are also skeptical about theonline retailer’s US expansion, withreports of recent delivery bottlenecks and teething issues.

Read more: ASOS had to swap out a photo after someone noticed a model was wearing bulldog clips to alter the fit of a dress

Although turnover and sales figures have risen, profits did recently fall significantly. ASOS now expects to generate only$36 million to $42 million in 2019 — compared to $123 million pounds in 2018.

To increase its profitability, ASOS is taking the unusual step of passing the pressure on to its suppliers and asking to pay 3% less on clothing and accessories as early as September 1.

Read more: People applaud ASOS for showcasing models’ stomach rolls instead of editing them

“We have recently reviewed the current status of our supplier arrangements, also taking into account the significant investments we have made over the last few years and will continue to make, to lay the foundations for future growth,” the letter said. “We have set our sights on becoming one of the few companies with truly global scale in the market and we are confident that we will achieve this.

“Our future growth aspirations not only benefit us but also benefit you, our valued partner. We hope you will understand this necessary change.”

Source: Read Full Article