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(Alliance News) - Asos PLC on Monday said it is in talks to amend covenants in a credit facility, a move the online retailer believes will offer it better "financial flexibility" amid the current economic uncertainty.
The London-based online fashion retailer said it is in the "final stages" of sealing an amendment to future financial covenants in its revolving credit facility. The lending facility matures in July 2024.
"This action will give Asos significantly increased financial flexibility, against the uncertain economic backdrop. Asos retains a strong liquidity position, and this is a prudent step in the current environment," the company said.
Sky News over the weekend had reported that Asos's biggest lenders called on advisers, after the firm had approached the banks to ask for changes to borrowing arrangements. Sky News also noted that one major credit insurer for Asos's suppliers has reduced its support. This could force Asos to pay for products upfront.
In April, Asos reported its revenue in the six months to February 28 inched up 1.4% to GBP2.00 billion from GBP1.98 billion a year prior. However, it swung to a pretax loss of GBP15.8 million from a GBP106.4 million profit, noting rising bills, inflation and supply chain woes.
Chief Financial Officer & Chief Operating Officer Mat Dunn said at the time: "At our half year results, we set out the actions we had taken as we faced into a more challenging backdrop, notably the work undertaken in the face of the global supply chain challenges which led to an improved stock profile and increased newness and availability...What is now clear, based on the significant increase in returns rates that we have seen, is that this inflationary pressure is increasingly impacting our customers shopping behaviour. It is too early to tell for how long the current pattern of customer behaviour will continue but we are taking swift and decisive steps to minimise the impacts".
Asos shares fell 11% to 474.00 pence each in London on Monday morning.
By Tom Budszus; tombudszus@alliancenews.com
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