Asos losses widen to £120million as sales fall amid stock and inventory revamp

Asos sales plunged by nearly a fifth as it presses ahead with necessary action to turn the business around

Online fashion giant Asos has reported that losses have deepened following a drop in half-year sales by almost 20%, amid its ongoing overhaul.

The firm recorded underlying pre-tax losses of £120million for the six months leading up to March 3, compared to losses of £87.4million the previous year. The company saw an 18% like-for-like sales decrease on an adjusted basis in the first half and confirmed it still anticipates sales to decrease by as much as 15% over the full year.

Asos expects underlying earnings in the 2024-25 financial year to reach significantly higher than the preceding two years, thanks to cost cuts and a reduction in stock levels. Chief executive Jose Antonio Ramos Calamonte stated that 2023-24 “is about taking the necessary action to get us to that path”.

The dip in sales was attributed to Asos’s efforts to revamp, having reduced their stock intake by around 30% year-on-year in order to “right size” stock levels and clear old inventory. It reiterated that it is ahead of its plans to reduce stock and aims for more clearance sales during the last six months of the financial year.

Mr Ramos Calamonte explained: “At the beginning of this year we explained that 2023-24 would be a year of continued transformation for Asos as we take the necessary actions to deliver a more profitable and cash generative business. Asos is becoming a faster and more agile business, and we are reiterating our guidance for the full year as we lay the foundations for sustainably profitable growth in 2024-25 and beyond.”

Wednesday saw Asos announce the appointment of a new chief financial officer, Dave Murray. He was previously CFO at MatchesFashion and will assume his position on April 29. He steps into the shoes of outgoing interim CFO, Sean Glithero.

The firm has been pursuing cost-cutting measures, aiming to reduce inventory and enhance profitability. However, its not been smooth sailing, as intense competition from international brands like Shein and Temu, as well as online platforms, have all weighed heavily on UK fast-fashion retailers.

These pressures are compounded by stiff financial constraints on consumers’ budgets. Mr Calamonte remained positive, saying: “Our progress over the last six months means we can feel confident that from 2024-25 we’ll have the right level of newness to excite our customers again.”

“While we can be proud of what we’ve achieved so far, there is always more to do.”