Asos posts three percent drop in Christmas sales

For the four months ended December 31, 2022, revenues at Asos plc declined by 3 percent to 1,336.5 million pounds, which the company said were broadly in line with expectations.

The company said in a statement that trading in the period was volatile and Asos expects these trends to continue through this financial year, but basket economics have proved resilient.

Commenting on the trading update, José Antonio Ramos Calamonte, Asos chief executive officer, said: "We are undertaking necessary strategic and operational changes, with our focus shifting from prioritising top-line growth to building a more relevant and competitive fashion business with a disciplined approach to capital allocation and ROI. We retain ample balance sheet flexibility and reiterate our expectations for FY23."

Highlights of Asos financial performance across geographies

The company’s UK sales were down 8 percent, reflecting weak consumer sentiment, which was particularly significant in September, impacted by national newsflow, and December, which was affected by disruption in the delivery market.

EU sales grew 6 percent, driven by improved basket economics supported by price increases, and customer growth, with the Netherlands and Ireland notably strong.

The company added that US sales fell 2 percent, with slower wholesale performance acting as a drag on retail sales, while ROW sales fell 10 percent reflecting implementation of a range of strategic measures, including a reduction in performance marketing spend to optimise return on investment, and changes to delivery thresholds and charges.

Active customers remained flat at 25.5 million versus P1 FY22. Sdjusted gross margin was broadly flat, down 10 bps to 42.9 percent, while reported gross margin declined by 690 bps to 36.1 percent. The company execs a significant improvement in gross margin in H2 FY23.

Asos continues to expects H1 loss

Asos continues to expect H1 FY23 loss, driven by usual profit phasing, headwinds from inflation and annualisation of elevated return rates.

These headwinds, the company further said, are expected to persist into H2 FY23 but will be more than offset by accelerating benefits from the Driving Change agenda and tailwind from freight.