by Struggling online fashion retailer Asos Plc and its lenders are discussing whether to hire a restructuring expert after the departure of its chief financial officer.
A number of turnaround professionals have had informal discussions about a role, which would be below executive level, but no decision has been made, according to people familiar with the matter.
Asos lenders include Barclays, HSBC and Lloyds Banking Group. The banks are advised by AlixPartners and Clifford Chance. Any appointment could potentially provide further support for Asos as it seeks to revive its fortunes after a sharp drop in performance since the pandemic.
Asos, advised by PJT Partners Inc. and EY, is going through a tumultuous time as consumer demand declines and costs rise, thanks to a spike in wages and energy. Product returns are also increasing.
AlixPartners and Asos declined to comment.
Asos installed a new chief executive in the last 18 months and its recently departed chief operating officer and chief financial officer. Acting CFO Katy Mecklenburgh resigned about a week ago and will join Softcat in the spring. Talks with Asos lenders were launched after the announcement of Mecklenburgh’s departure and continued into the past week.
Although the retailer managed to renegotiate the terms of its £350m ($429m) revolving credit facility in October, the extension only lasts until 2024 and Asos will have to resume talks with lenders over the loan next year.
CEO Jose Antonio Ramos Calamonte said in October that free cash flow this fiscal year would be zero at best and the company would post a loss in the first half. Asos said its international operations were behind expectations and cited issues with its supply chain. It has also pledged to “strengthen” its management team.
In response to its challenges, the company is writing off up to £130m of stock, cutting costs and slowing automation in its warehouses. The retailer is also trying to boost the best performing segments of its business, such as its popular Topshop brand whose sales grew 105% in fiscal 2022.
It is relatively common for lenders to seek to strengthen the financial management of companies in the event of refinancing.
Founded in north London in 2000 by Nick Robertson and his brother with small seed capital, Asos was a stock market darling for many years amid rising sales and profits. That has changed, however, with the stock losing almost 76% since the start of this year.
Mike Ashley’s Frasers Group Plc, which has bought a number of smaller retailers this year including tailor Gieves & Hawkes, has increased its stake in Asos to just over 5%.
–With the help of Irene García Pérez.
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