ASOS bonus tweak stores up longer-term woes

A model walks on an in-house catwalk at the ASOS headquarters in London, April 1, 2014. REUTERS/Suzanne Plunkett/File Photo

LONDON, Dec 1 (Reuters Breakingviews) - Cash is king for ASOS’s (ASOS.L) newish chief executive. On Tuesday, the 653 million pound fast fashion retailer changed the targets for José Antonio Ramos Calamonte’s bonus next year. The portion of the up to 1.1 million pound payout linked to revenue growth will fall to 15% from 30%. Meanwhile the share linked to cash flow has been upgraded to 35%, and cost cuts will also be rewarded.

The cheeky move makes sense given the dire backdrop. With inflation soaring to over 11% in October, consumers have less money for throwaway fashion. ASOS reported a full-year loss in October and needs to cut costs and debt, which next year may reach 240 million pounds, nearly double the 2021 figure, according to Refinitiv data. The hope is that culling staff and slashing costs may help the group avoid raising fresh equity. Yet that may mean lower prices or fewer customers in future. With the years of rapid growth over, ASOS may look even more vulnerable to a takeover. (By Aimee Donnellan)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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