Asos losses deepen as it prioritises shift ‘back to fashion’

For the 52 weeks to September 3, 2023, Asos reported a loss before tax of £296.7m, deepening from a loss of £31.9m in the previous year. The retailer saw operating losses also deep to £248.5m.

Group sales dropped 10% to £3.54bn, while adjusted group revenues fell 11% to £3.52bn.

Adjusted EBITDA slumped by £59.4m to £124.5m, while adjusted EBIT slipped into a £29m loss, compared to a £44.1m profit in the previous year.

Asos had previously warned of a full-year loss after it was forced to delay its results last week to allow its auditor PwC more time.

The retailer said it had made “significant operational progress” in 2023, despite the losses, and had “executed on” its ‘Driving Change’ agenda priorities: reducing stock levels by 30%; increasing profit per order by 30%; and refinancing the balance sheet.

Looking ahead to next year, the retailer said it will “prioritise a shift ‘Back to Fashion’, leveraging Asos’ strengths to offer the best and most relevant product, styled the Asos way, with an exciting and seamless customer experience geared around fashion and excitement”.

Asos said the shift will be supported by £30m “incremental investment into marketing, while maintaining an obsession with operation excellence and disciplined capital allocation”.

However, it warned that the “final cleansing of stock over FY24 will remain a drag on sales growth and profitability” and anticipated sales decline of 5% to 15% next year.

By 2025, Asos said it expects to “return to growth with EBITDA margin around pre-Covid levels”.

Chief executive José Antonio Ramos Calamonte said: “FY23 was a year of good progress for Asos in a very challenging environment and I am proud of what the business has achieved. We have reduced our stock balance by around 30%, significantly improved the core profitability of the business, strengthened our balance sheet and refreshed our leadership team.

“Encouragingly, stock that was brought in under our new commercial model over the summer months has performed strongly and this gives us the confidence to accelerate the rollout of our new processes. As such, we are taking decisive action in FY24 to clear stock brought in under our old model while substantially improving our speed to market and investing in our brand, reminding our customers what we’re really about: fashion.”