Asos has expressed confidence in its recovery strategy despite reporting a £380 million pre-tax loss for the past financial year.
The online fashion retailer has halved its inventory levels since 2022 and shifted focus to full-price sales, aiming to improve profitability. Chief Executive José Antonio Ramos Calamonte described recent changes as “medicinal,” with measures such as stricter return criteria and streamlined marketing starting to show positive signs.
The company’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) reached £80.1 million, down from £124.5 million the previous year, with a £100 million write-off in old stock and a £141.8 million loss due to the closure of its Lichfield warehouse. However, Asos is targeting a 60% EBITDA growth in the coming year, projecting figures between £130 million and £150 million.
With reduced discounts, average basket values are up 2% year-on-year, though active customer numbers have fallen 16% as a result of less aggressive marketing. Calamonte noted that competition from fast-fashion and second-hand platforms like Shein and Vinted is not a concern, emphasising Asos’s focus on delivering the right products at the right time.
Additionally, Asos’s recent sale of a 75% stake in Topshop to Bestseller, a group owned by major shareholder Anders Povlsen, and a £250 million bond refinancing have strengthened its balance sheet. The company reported a positive cash flow of £37.7 million this year, up £250.7 million from the previous year.
Looking ahead, Asos is considering the possibility of opening a standalone London store to increase customer engagement. Calamonte indicated this would be a strategic move to enhance brand connections, not a shift towards omnichannel retailing.
Shore Capital upgraded Asos’s rating from “sell” to “hold,” citing the retailer’s improved balance sheet and profit outlook, while Peel Hunt praised the company’s inventory management and cash flow improvement.
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Asos optimistic about turnaround despite £380m loss