LONDON (Reuters) – British online fashion retailer ASOS is in talks with lenders to change the terms of its 350 million pound ($391 million) loan facility, it said on Saturday.
“ASOS … confirms that it is in the final stages of agreeing an amendment to the future financial covenants of its revolving credit facility, which matures in July 2024,” it said in a statement.
The retailer said the move would give it significantly increased financial flexibility, in an uncertain economic environment.
“ASOS maintains a strong liquidity position and this is a prudent step in the current environment,” he said.
The statement was released after Sky News reported that ASOS had recently approached its lenders, including Barclays, HSBC and Lloyds Banking Group, to amend its borrowing arrangements.
Sky News said the lenders were lining up AlixPartners and law firm Clifford Chance to advise them on an “ongoing situation”.
ASOS, which sells 20-something fashion, was an early winner of the pandemic as confined consumers shopped online, but struggled as people returned to stores and its shares fell by 78% so far this year.
It warned last month that it expected pre-tax profit for the year ending August 31 to be around the low of its forecast of £20m to £60m after sales of August weaker than expected.
He said the August deficit reflected the impact of accelerating inflationary pressures on consumers and a slow start to fall/winter shopping.
ASOS also forecast net debt for the full year of around £150m, which was higher than earlier forecasts.
The Sky News report also said that at least one major trade credit insurer which provides cover to ASOS suppliers in the event of non-payment has reportedly decided to reduce its support.
“This happened towards the end of August and there was no negative impact on business relationships with our suppliers,” ASOS said in response.
ASOS is due to release its annual results on Wednesday.
(Reporting by Mrinmay Dey in Bengaluru and James Davey in London; Editing by Kirsten Donovan and David Clarke)
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