ASOS reports sales slump as it offloads stock to ‘right-size’ the business
Online fashion retailer ASOS has kept its guidance for the rest of the year, after clearing old stock in a bid to improve its profitability.
The digital-only fast-fashion website said sales had fallen by 18 per cent in the 26 weeks to 3 March 2024,, which included the Christmas and New Year break.
It told the markets this morning that the sales decline was “broadly in-line with guidance” because in the fourth quarter of 2023, trends were expected to continue to slow down.
This was due to “actions taken” in the last financial year to improve profitability, and a 30 per cent fall in stock in take, as it tried to “right-size” the business.
This comes after ASOS, which Frasers group has a major shareholding in, had a rocky time in the last five years. When the pandemic hit in 2020, its share price absolutely soared as Brits were stuck at home, and turned to online shopping while restricted from going to the high street.
When lockdown ended, Brits returned to shops in real life, sending its shares plummeting from 5,706p in March 2021 to 925p in March 2023.
The company then embarked on a turnaround plan in a bid to respond to the changing post-pandemic market. It posted hefty £296.7m loss in early November
ASOS said it had made progress on its strategy, including a bid ” to clear aged stock and transition to the new operating model” by 2025.
As a part of these proposals, it is looking to reduce its inventory to £600m by the end of the year, bringing “high-fashion product” from design to site in under a month, which increases its ability to respond to demand.
The firm said its cash flow improved by £240m compared to the first half of 2023, with an outflow of £20m, which it said was the “strongest first-half cash performance since 2017 [FY].”
Asos said it had a “robust” cash balance of £330m, up £20m on the last year, and it was maintaining its full-year guidance, which includes a 5-15 per cent sales decline,
José Antonio Ramos Calamonte, Chief Executive Officer, said: “ASOS is becoming a faster and more agile business, aided by the incredible work of our teams to speed up all of our processes to deliver the fashion, quality and prices that our customers want, when they want it.”
“I’m excited by the performance of our new collections, while we have also made great progress in monetising inventory that built up over the pandemic and in improving the core profitability of our operations. We have reconfirmed our guidance for FY24 as we lay the foundations for a more profitable, cash generative business from FY25 and beyond.”