Asos confident of returning to “sustainable profit” in second half of year

Retailer Asos has revealed it slumped to a £290.9m half year loss amid a major restructuring and a period of sliding sales.
By Greg Wright
Published 10th May 2023, 09:18 BST
Updated 10th May 2023, 09:22 BST

The online fashion firm’s losses for the six months to February 28 compare with losses of £15.8m a year earlier, widened by stock write-offs as well as property impairments and the cost of warehouse closures and moves to trim its office space.

Sales fell 10 per cent on a constant currency basis to £1.8bn. On an underlying basis, it swung to a pre-tax loss of £87.4m from profits of £14.8m a year ago. But the group said it was confident of returning to “sustainable profit” in the second half of its year as it focuses on profitable sales.

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Jose Antonio Ramos Calamonte, chief executive of Asos, said: “I am pleased with the strategic and rapid operational progress the business has made in the first half of the financial year, against some very challenging trading conditions.”

Retailer Asos has revealed it slumped to a £290.9m half year loss amid a major restructuring and sliding sales cash-strapped consumers cut back on their spending.Retailer Asos has revealed it slumped to a £290.9m half year loss amid a major restructuring and sliding sales cash-strapped consumers cut back on their spending.
Retailer Asos has revealed it slumped to a £290.9m half year loss amid a major restructuring and sliding sales cash-strapped consumers cut back on their spending.

He added: “While some of these changes have impacted short-term sales growth, there are many causes for optimism as we progress through the second half of the year. I am very confident of our return to sustainable profit and cash generation in the second half of the year and beyond.”

Richard Hunter, Head of Markets at interactive investor, commented: “The strain of the enforced transformation programme is showing at Asos, although there are some early chinks of light. Ultimately, the company identified that it had, in places, become inefficient and that certain customers, brands, partnerships and indeed geographies were becoming untenable.

"The group has therefore battened down the hatches to drive towards a more sustainable model, with the current priority being profitability over growth.

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"The main focus of the group at present is to streamline and focus on the future,’’ he added. “Markdowns have been reduced, a more disciplined marketing spend has been put in place, changes have been made to the overall proposition and there is currently less breadth of stock, concentrating on more profitable lines where possible.

"There is little doubt that there is never a perfect moment within a rugged retail environment to be undertaking a transformation of this magnitude. Even so, the change was necessary and the group has strings to its bow which could yet prove to be a saviour, such as its targeted demographic of 16 to 35 year olds and a selection of price points which gives the consumer a wide choice.”

Mr Hunter said there were also signs of life in some of its partnership lines, with the company singling out the success of the Topshop brand to date as an example.

He added: “There are undoubted signs of progress in these numbers, which also underline the scale of the challenges which remain.”