Asos Battles Sales Slump With AI Fashion Revolution
British online fashion giant Asos has reported a pre-tax loss of £281.6 million for the year ending 31 August, showing significant improvement from the £379.3 million loss recorded the previous year. Despite this financial progress, the company faced a challenging period with sales declining by 12% over the same period.
AI Stylists and Return Crackdown
In response to the sales downturn, Asos is deploying artificial intelligence technology to revitalise the shopping experience. The retailer is testing its "Styled for You" feature, which uses AI trained on a database of 100,000 curated outfits to suggest complementary items based on a customer's purchase history and browsing behaviour.
For loyalty programme members buying a dress, for instance, the system might recommend pairing it with specific jackets and heels for formal occasions or sweaters and trainers for casual wear. These personalised suggestions draw from Asos ranges while considering current consumer trends and individual preferences expressed through the app.
The company has also taken firm action against what it terms 'serial returners' - customers who frequently purchase and return items while buying very little. By reducing discounts and implementing charges for excessive returns, Asos has successfully cut return rates by 1.5 percentage points, though these measures contributed to the overall sales decline alongside what the company described as a "soft consumer backdrop."
Competitive Pressures and Future Outlook
Chief Executive José Antonio Ramos Calamonte stated his ambition to "make Asos not just a place to shop, but a destination for inspiration and style." The company's struggles have persisted for over three years following a pandemic-era sales boom that left it with £1 billion of unwanted stock when high street shops reopened.
Asos faces intensified competition from fast-growing rivals including Chinese-founded marketplace Shein and established operators like Next, which combines physical stores with efficient online services. The retailer is additionally using AI to accelerate its design process, visualising how products might appear on models or in different colours before production.
Despite the narrowed losses, City analysts remain cautious. Anubhav Malhotra of Panmure Liberum noted that Asos's sales decline was worse than expected and that the company appears to be "bracing for another year of sales decline." He commented that while recent actions have "managed to plug the holes in a leaking bucket," significant challenges remain in the increasingly competitive fast fashion and omnichannel retail landscape.
Calamonte expressed confidence that "with the most difficult work behind us, I'm more confident than ever that we have the right strategy and capabilities to achieve our ambition to become the most exciting destination for fashion-lovers."
