Asos posts H1 loss, revenues drop 7 percent

Asos delivered an adjusted pre-tax loss of 87.4 million pounds for the first half period and a reported pre-tax loss of 290.9 million pounds.

The company said, revenue for the period declined by 7 percent or 8 percent on a reported basis in the first six months of FY23 and 15 percent in the second quarter, reflecting both deliberate actions on capital allocation to improve profitability and a challenging trading backdrop.

“Our focus is on improving our core profitability, prioritising order economics over top-line growth and 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. 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,” said José Antonio Ramos Calamonte, the company’s chief executive officer in a statement.

The company’s UK sales were down 10 percent, Europe flat, US down 7 percent and the rest of the world down 12 percent.

Adjusted gross margin remained broadly flat at 42.9 percent. It showed progress over the period, with February adjusted gross margin up more than 300 bps. Adjusted EBIT loss for the period was 69.4 million pounds

Commenting on the current trading, the company added, sales momentum in the second quarter, down 15 percent CCY excluding Russia, has broadly continued into March and April with approximately half of the sales decline driven by planned driving change initiatives.

Asos will retain its focus on profitable sales in the second half and its commitment to exit the year with a cleaner inventory position. If there is no improvement to the external trading environment, expectations for the second half include sales excluding Russia to decline low double-digit, adjusted gross margin up 200bps; inventory reduction of 20 percent; adjusted EBIT of 40 to 60 million pounds, and adjusted EBIT margin of 3 percent.