The very day Asos announced the long-awaited appointment of its new chief executive, the retailer also issued a shocking profit warning as the cost-of-living crisis hit its 20-something customer hard.

JA Headshot

José Antonio Ramos Calamonte has been promoted to chief executive

Eight months after the departure of Nick Beighton, Asos made the surprise appointment that it was looking internally to secure its new boss.

The fashion etailer has promoted chief commercial officer José Antonio Ramos Calamonte to the top job and named non-executive director Jørgen Lindemann as the incoming chair, effective from August 1.

The announcement came at a time of uncertainty for Asos and the fast fashion sector in general. 

The leadership news was accompanied by a profit warning. Revenue growth expectations are now 4% to 7% and adjusted profit before interest and tax will be between £20m and £60m – a substantial reduction from its previous guidance of £110m to £140m.

The retailer attributed this to sky-high returns rates as consumers clawed back discretionary spend in the face of the cost-of-living crisis, while also dealing with continued supply chain woes and increased markdowns to clear excess stock.

Asos’ share price has consequently plummeted 32.5% at the time of writing.

Ramos has his work cut out to put Asos back on the right track, so what does he bring to the table?

Strength in continuity

With its sights set on growth in the US and the rest of the world, Asos initially looked across the pond to find its new boss.

After eight months of searching, it may seem odd that what the retailer was seeking was already within the business. But Clarity Search managing director Fran Minogue believes the hire is a “wise decision”.

“They don’t need a change in strategy or direction. They need people who know the business and know how to just get on with it”

Fran Minogue, Clarity Search

“I think one of the most important things for Asos at the moment is continuity,” she says.

“They don’t need a change in strategy or direction. They need people who know the business and know how to just get on with it.

“It’s a good idea to give him a chance. He’s supported by [CFO and interim CEO] Mat Dunn and the rest of the team, so I think he could do a good job.”

Certainly, Ramos has made it clear that he intends to continue delivering on the strategy he helped create in his former role, which he had held since January 2021, and which was presented at Asos’ capital markets day last year.

Own-brand, fulfilment on behalf of partners and international growth are the three key priorities.

“I am totally committed to this strategy,” Ramos told Retail Week.

“The most important thing now is to focus on the medium to long term – how do we make sure we are always putting the customer in the centre of what we do and delivering outstanding value for money on fashion?”  

José Antonio Ramos Calamonte, Asos

“It is the right strategy that builds on the right pillars and I’m pretty pleased that we have seen good progress against this strategy already, even over the course of the last month, in spite of the changing consumer sentiment.

Asos2-index

Own-brand, fulfilment on behalf of partners and international growth are three key priorities

“If anything, what we need to make sure is that we adapt to this new situation. Obviously, we developed a strategy in a completely different macroeconomic moment so, in that sense, how we adapt to this inflationary environment is going to be very critical. 

“The most important thing now is to focus on the medium to long term – how do we make sure we are always putting the customer in the centre of what we do and delivering outstanding value for money on fashion?”  

Perhaps one of the reasons Asos struggled to fill the role externally ties into the tough conditions of the moment, Minogue suggests.

Rivals such as Boohoo have suffered lately as issues including supply chain delays, constrained consumer spending power and the return to in-store shopping have conspired to leave ecommerce giants out in the cold.

An uncertain road ahead

With a rocky year ahead, Asos has downgraded its expectations, citing changing consumer behaviour and elevated returns rates.

While Boohoo claims that higher returns are related to a change in product mix – for example, shoppers buying more occasionwear in preparation for big events this summer – Asos has pointed to a deeper cause.

“When we isolate out the factors that we all know are predictive of returns – product mix, payment mix, country mix, etc –what we’ve seen between March and April is that there is an underlying shift in consumer behaviour,” explains Dunn.

“When we analyse it in different ways, it’s not a particular brand, it’s not a particular product, it’s not a particular category and it’s not a particular country, but it’s a broad-based phenomenon.”

As the timing coincides with increased pressure on the cost of living, Dunn believes the crisis is impacting the way people shop, encouraging them to send back more than they usually would.

Dunn says this may normalise as pressures ease and shoppers may also reduce how much they purchase initially, helping to ease the burden of returns.

The retailer said it was fully committed to keeping returns free for customers, however, as “part of the value proposition”.

“We think we are very well geared to be a winner at the end of this crisis because of our fashion credibility and our capacity to offer fashion for money” 

José Antonio Ramos Calamonte, Asos

Asos5-index

Elevated returns rates are impacting the fast fashion sector

Communicating value for money is something that will be high on Ramos’ agenda as Asos’ target 20-something customer is hit hard by the rising cost of living.

While Boohoo has said its sales may be cushioned by the fact that its slightly younger shopper often still lives at home, Asos’ customers’ concerns about rent and other bills will conflict with their desire for a new outfit for an event.

Asos may have downgraded its annual expectations, but Ramos is optimistic that it will emerge stronger in the long run.

“We think we are very well geared to be a winner at the end of this crisis because of our fashion credibility and our capacity to offer fashion for money,” he concluded.

As Asos enters a new era, Ramos’ knowledge of the business should help him hit the ground running. And, following that profit warning, he’ll need to be fleet of foot.

  • Get the latest fashion news and analysis straight to your inbox – sign up for our weekly newsletter