Asos posted another loss despite slashing inventory levels and boosting full-price sales, as it remains focused on “sustainable, profitable growth”, including the launch of a loyalty programme.
For the year ending 1 September, the online fashion giant posted a pre-tax loss of £379.3m, down from a loss of £296.7m the previous year, as sales plunged by 18% to £2.9bn.
Despite the loss, Asos CEO José Antonio Ramos Calamonte said: “We have already seen the green shoots in the performance of our new stock in recent months which gives us confidence that our new commercial model is delivering customers the right product at the right time.”
“This will be the driving force behind our gross margin improvement back towards 50% in the medium term.”
However, Asos achieved an adjusted EBITDA of £80.1m, hitting the upper end of expectations.
The retailer’s turnaround strategy involved completing its stock transition, with inventory down approximately 50% since its last financial year, resulting in fresher stock and improved customer demand for newness.
Calamonte stressed: “Our product is now in the strongest position it has been in years, with the right level of newness to excite customers, and we have fundamentally improved our profitability through a relentless focus on operational efficiency.”
In the past quarter alone, sales of new products increased 24% year-on-year, while Asos’ disciplined stock management reduced aged stock by about 75%, with over 80% of items now less than six months old.
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Looking forward, Asos plans to build on its ‘Back to Fashion’ strategy, adding “exciting brand partners”, enhancing customer experiences, expanding its test and react model to 20% of own-brand sales, and launching a loyalty programme alongside the launch of a standalone site for Topshop.
In its outlook statement it said that “as a result of the significantly higher mix of full-price sales and the decisive actions taken to improve order economics, we are confident in achieving significant profit improvements in H1 FY25 and the full year regardless of revenue levels”.
Calamonte added: “With these solid foundations in place, we can focus on delivering experiences that delight our 20m customers.”
“We achieved our key priorities for the year, significantly reducing our inventory position, while generating positive adjusted EBITDA and free cash flow.
“Following the year end, we further strengthened our balance sheet with our Topshop Topman joint venture and our refinancing.
“There is much work to do, but we have already seen our efforts rewarded with new product sales increasing 24% YoY over the last three months. I am energised by the progress we have made so far and excited for the next phase of our journey.”
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