Ecommerce

Asos is raising 80 million pounds

Time Stamp: May 30, 2023 4:39 AM
Source Node: 2534161

Republished By Plato

British fashion platform Asos has successfully raised 75 million pounds (86.7 million euros) from institutional investors. Additionally, it has launched an equity raise of 5 million pounds (5.8 million euros) from retail investors. With the capital injection, the company wants to improve stock control and reduce costs.

On May 10^th, the fashion retailer released its interim results for the six months to February 28^th of this year. It had made a loss of 291 million pounds (336.4 million euros), as sales declined 8 percent. Within the United Kingdom, the company’s sales dropped 10 percent.

Many online fashion retailers are struggling to deal with a change in online consumer behavior, as brick-and-mortar stores reponed after the pandemic restrictions. Consumers are also buying less, due to inflation.

A loan of €231.2 million

Last Friday, Asos announced that it has secured 86.7 million euros in funding from institutional shareholders. It is currently raising 5 million euros in an equity round, by offering shares to retail investors. Additionally, the company took out a loan of 200 million pounds (231.2 million euros) from Bantry Bay Capital, a specialist lender that bails out troubled retailers.

‘Asos entered into a €86.7 million credit revolving facility with an interest rate of 11%.’

In addition to the loan, Asos has also entered into a 86.7 million euros credit revolving facility with Bantry Bay Capital. It carries an average annual interest rate of 11 percent. With the new funds, Asos hopes to return to profitability within a year by simplifying processes, cutting costs and innovations.

‘Refinancing may be needed’

Due to the high interest rate, analysts say that there is a high risk that Asos’ plan will not be successful. It might need to refinance. “There still remains a worst-case scenario that further financing may be needed to replace the 500 million pounds (577.9 million euros) in convertibles in 2026”, said Anubhav Malhotra, analyst at Liberum.