Asos asks suppliers for discounts in bid to cut costs

The online fashion business has written to suppliers to request a 3% reduction in prices on all stock it receives after September 1.

Asos insisted the “necessary change” in payment terms would “fuel joint growth” for the pureplay and the brands it stocks.

The business is under increasing pressure after issuing two profit warnings in the space of a year and is seeking ways to streamline its cost base.

Asos has suffered in the wake of “operational issues” arising from the opening of a new warehouse in the US, where growth was “lower than expected” in the four months to June 30.

Full-year profits are now expected to come in between £30m and £35m on a pre-tax basis.

In the letter to suppliers, seen by Drapers, Asos highlighted the launch of warehouses in the US and Germany as “transformational investments” for the business, alongside the cash it has ploughed into sustainability, customer acquisition and customer retention.

The letter said: “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.

“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 and on behalf of Asos we would like to thank you for your continued support.”