Asos revenue drops 18% as it targets profitability boost

Revenue at Asos fell by 18 per cent to £1.5 billion in the 26 weeks to 3 March.

The online fashion retailer expects its full-year sales to drop by between five and 15 per cent compared to 2023.

But Asos said that despite recording lower revenue it has made “strong progress” on its priorities to become faster, more agile and more profitable.

Asos said it made a pre-tax loss of £270 million, which compares to a loss of £290.9 million compared to the same time period the previous year.

Commenting on the results José Antonio Ramos Calamonte, chief executive at Asos, said that 2024 will be a year of continued transformation for the company and that it is taking the necessary steps to become a more profitable business.

“Under our Back to Fashion strategy, we set out three priorities for the year - to offer the best and most relevant product, to strengthen our relationship with customers and to reduce our cost to serve,” he said. “We have delivered on each of these in the first half of the year, including right-sizing our stock ahead of target to drive our best first half cash performance since 2017 and seeing excellent results in our Test & React model, which is growing at pace.

“Asos is becoming a faster and more agile business, and we are reiterating our guidance for the full year as we lay the foundations for sustainably profitable growth in FY25 and beyond."

The company added that it expects EBITDA to be higher in 2024 compared with 2023 due to a higher gross margin resulting from the removal of old stock and fewer price reductions.

Guy Lawson-Johns, equity analyst at Hargreaves Lansdown, said that Asos’ efforts to streamline its inventory had released cash to invest in the business and had led a significant improvement of free cash flow which would provide the company with momentum.

“Despite these operational improvements, there are still structural hurdles to overcome,” he said. “It’s no secret M&S and Next have been growing sales in the third-party brands ASOS is known for, and newer entrants like Temu are taking market share from the fringes.

“Successfully expanding into international markets, like the US, will be crucial for the company's future, although this comes with its own set of challenges,” Lawson-Johns added. “In the near term, management needs to closely monitor the wider impacts of its margin improvement programmes.”

Asos also announced the appointment of Dave Murray as chief financial Officer and executive director and Christine Cross as an independent non-executive director of the company.

Murray has held a number of roles across the industry, including at Sainsbury’s, Amazon and Farfetch. He joins Asos from Matches Fashion, where he worked as chief financial officer.

He will take up his role from 29 April 2024. Sean Glithero, who is the current Interim CFO will leave the company following a handover period.

Cross will join Asos on 16 April 2024. She will chair the remuneration committee and will serve as a member of the audit committee.

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