Asos has reported a significant pre-tax loss of £379.3m for the year ending 1 September, marking a notable decline from the previous year’s figures.
- Despite the loss, Asos remains optimistic about its new commercial model, seeing improvements in its stock performance.
- The retailer’s strategy included a major transition in inventory, achieving a reduction by half compared to the previous financial year.
- Sales of new products saw a notable increase of 24% year-on-year, indicating improved demand.
- Asos plans to enhance customer experiences further, initiate a loyalty programme, and focus on profitable growth.
Asos has faced a challenging financial year, reporting a pre-tax loss of £379.3 million, a marked increase from the previous year’s loss of £296.7 million. Sales also fell by 18% to £2.9 billion. In response, the company’s chief executive, José Antonio Ramos Calamonte, highlighted signs of improvement, referring to them as ‘green shoots’ in their recent stock performance.
Despite the loss, optimism remains high within Asos’s ranks. According to Calamonte, the company’s new commercial model shows promise in delivering the right products to customers at optimal times. Aiming for a medium-term gross margin improvement back towards 50%, this model has seen positive initial results.
A key aspect of Asos’s strategy has been a significant reduction in inventory, cutting it by approximately 50% from the last financial year. This move to refresh their stock has seemingly paid off, as it met with increased consumer enthusiasm for new products. This effort is reflected in a 24% year-on-year rise in new product sales, while the amount of older stock reduced by about 75%.
In addition to restructuring inventory strategy, Asos has been successful in achieving an adjusted EBITDA of £80.1 million, which falls at the upper end of expectations. The company has also focused on operational efficiency as a way to boost profitability, leaving Asos with a more robust product position than it has experienced in years.
Looking forward, Asos intends to build on its ‘Back to Fashion’ strategy. This includes bringing in new and exciting brand partnerships, enhancing customer experiences, and expanding its ‘test and react’ model to 20% of own-brand sales. Key initiatives such as a new loyalty programme and a standalone site for Topshop are set to bolster their growth plans. With a focus on a higher mix of full-price sales and improved order economics, the company anticipates a significant improvement in profits in the coming financial periods.
Asos remains focused on delivering profitable growth through strategic changes and improved customer experiences, despite current financial challenges.
