ASOS in talks to boost finances, is confident of good result
ASOS has moved to reassure the markets following reports about its financial situation and issued a statement at the weekend that it repeated in a stock exchange release on Monday.
It said it “notes recent media reporting and confirms that it is in the final stages of agreeing an amendment to the future financial covenants in its Revolving Credit Facility, which matures in July 2024. This action will give ASOS significantly increased financial flexibility, against the uncertain economic backdrop. ASOS retains a strong liquidity position and this is a prudent step in the current environment”.
The statement came after media speculation about its financial position. The Sunday Times also reported that leading credit insurer Allianz Trade (formerly Euler Hermes) had cut cover for its suppliers in recent weeks.
Credit insurance is key for retailers as it protects their suppliers and gives them the confidence that they’ll get paid even if companies they’re supplying go under.
Without such credit insurance it can mean that companies have to pay for the goods they’ve ordered upfront, denting their cash flows.
It’s only the latest in a number of problems that still-new CEO José Antonio Ramos Calamonte is having to deal with as the boom that online retailers saw during lockdowns has gone into reverse.
Shoppers have headed back to physical stores, which has hurt pureplay online businesses like ASOS. Delays in the supply chain have also been a problem that has affected the speed of deliveries.
A higher level of returns has also caused a headache and the current inflation problem in the UK in particular means shoppers in the company’s core market are thinking twice about buying new clothing, footwear and accessories.