Asos losses narrow as boss backs turnaround plan despite falling sales

Daily Mail​

24-04-2025

The chief executive of Asos insists the struggling fast fashion retailer new commercial model 'is working' after reporting smaller losses for its first half.
The Miss Selfridge owner, which is currently engaged in a long running turnaround plan, saw pre-tax losses fall £28.5million year-on-year to £241.5million in the six months ending 2 March.
But reported revenues slumped 14 per cent to £1.3.billion as Asos continued efforts to clear the £1.1billion of stock it has built up since 2022 and reduced its number of discounted items.
Asos warned revenues are expected to come in at the 'bottom end' of its guidance range for the full year.
Meanwhile, its adjusted earnings before nasties swung from a £16.3million loss the previous year to a positive £42.5million this time around.
The London-based company has slashed its inventory levels by about 60 per cent over the past three years and prioritised profitable sales by selling fewer goods at knock-off prices.
Gross margins at the FTSE 250 firm improved by 5.1 percentage points to 45.1 per cent, supported by a higher mix of full-price sales and decreasing markdown activity.
José Antonio Ramos Calamonte, chief executive of ASOS, said the results were 'the strongest sign yet that our new commercial model is working'.
European sales shrank by 19 per cent in the first half, owing to weaker consumer demand and cost-of-living pressures.
Sales fell by 30 per cent in the US, following the introduction of initiatives aimed at boosting profitability.
UK revenues only fell by 6 per cent as reduced discounting rates helped bolster average basket values.
Under a turnaround plan, the London-based company has slashed its inventory levels by about 60 per cent over the past three years and prioritised profitable sales by selling fewer goods at knock-off prices.
Asos accumulated excess stock after online clothing sales skyrocketed during the early part of the Covid-19 pandemic.
When lockdown curbs ended, the company's sales slowed dramatically and started declining as consumers returned to buying in stores and competition from Chinese rivals Shein and Temu heightened.
Calamonte said: 'Customers are responding positively to our focus on full-price sales, speed to market, and quality...and positive momentum with our partner brands.'
The group upheld its annual guidance for a minimum gross margin of 46 per cent and adjusted earnings before nasties at least 60 per cent higher at between £130million and £150million.
Yet the retailer faces a potential impact from President Donald Trump's new tariffs on countries like China, India and Bangladesh, where Asos has numerous suppliers.
Julie Palmer, partner at Begbies Traynor, remarked: 'Sadly, ASOS continues to face an uphill battle to regain its footing in the competitive online retail market.
'With revenue growth remaining elusive, the share price sitting far below its pandemic heights, and now the looming threat of tariffs, investors have little to be hopeful about.'
ASOS shares were 1 per cent down at 307p on Thursday morning and remain more than 90 per cent down on their pandemic-era peak in spring 2021.