ASOS asks suppliers for discount to support investment

Online fashion giant ASOS is seeking discounts from suppliers to help cut costs after a series of profits warnings.

The London-based firm has written to all suppliers to ask for a 3% discount on all goods received from 1 September and has justified the demand by suggesting that the move would “fuel joint growth” both for ASOS and the brands it stocks.

It is understood that this is the first time the 19 year-old business has sought supplier discounts, and it has cited the costs of implementing new warehousing in Germany and the US as one of the driving factors.

“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 to suppliers 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," it continued.

The costs and disruption of implementing the new warehouses have been detrimental to ASOS' profits. Last month it said that its pre-tax profits would now be in the region of £30 million and £35 million in the financial year to the end of August, compared with a consensus forecast of around £55 million. In 2018 it reported profits of £102 million.

CEO Nick Beighton said last month that he expected the disruption from the new warehouses to be dealt with by September. UK orders were largely unaffected as they are handled by an established facility in Barnsley.