Asos has reported a significant pre-tax loss for the recent financial year, yet remains optimistic about future growth.
- For the year ending 1 September, Asos posted a pre-tax loss of £379.3 million, an increase from the previous year’s loss of £296.7 million.
- The retailer has managed to cut inventory by 50%, focusing on full-price sales to improve profitability.
- Asos has seen a 24% year-on-year increase in the sales of new products, indicating strong customer demand.
- The company plans to launch a loyalty programme and new partnerships as part of its growth strategy.
Asos, the online fashion retailer, has reported a pre-tax loss of £379.3 million for the year ending 1 September, an increase from the £296.7 million loss recorded in the previous year. This decline accompanies an 18% drop in sales, bringing the total to £2.9 billion. Despite these setbacks, Asos is optimistic about its strategic direction and performance improvements.
The company’s CEO, José Antonio Ramos Calamonte, emphasised the presence of ‘green shoots’ in recent stock performance, reflecting progress in delivering desirable products to customers at the right time. This strategy is anticipated to drive Asos’s gross margin towards 50% over the medium term, highlighting a potential recovery path for the retailer.
A pivotal component of Asos’s turnaround strategy is its significant reduction in inventory levels, which have halved since the previous financial year. This reduction has ensured a fresher product range with over 80% of stock now being less than six months old. Such improvements have driven a 24% increase in the sales of new products compared to the previous year, reflecting heightened consumer interest.
Asos concludes the year with an adjusted EBITDA of £80.1 million, aligning with the higher end of its expectations. The retailer’s disciplined stock management, alongside efforts to enhance operational efficiency, have fundamentally strengthened profitability, according to Calamonte. The focus on providing fresh products has been key to maintaining customer engagement.
Looking ahead, Asos is preparing to build on its ‘Back to Fashion’ strategy. This includes integrating exciting new brand partners, enhancing customer experiences, and expanding its ‘test and react’ model to 20% of own-brand sales. Additionally, the launch of a loyalty programme and a standalone site for Topshop underscore the retailer’s ambition for sustainable growth.
The company remains confident in achieving significant profit improvements in the first half of FY25, as well as for the full year, regardless of revenue levels. Calamonte expressed enthusiasm over the progress made thus far, citing further strengthening of the balance sheet and continued success in new product sales as promising indicators for the future.
Asos remains committed to transforming its business model amid challenging times, focusing on strategic growth and operational efficiency.
