Asos loss widens, expects sales to decline in FY24

Asos reported an adjusted loss before tax of 70.3 million pounds for the year to September 3, 2023, while reported loss before tax was 296.7 million pounds.

Sales for the year declined by 11 percent or 10 percent on a reported basis to 3,538 million pounds, with the decline accelerating to 15 percent or 12 percent on a reported basis in the second half of the year.

The company anticipates sales decline of 5 percent to 15 percent in FY24, with positive adjusted EBITDA and material cash generation driven by stock sell-through, further reducing net debt. In FY25, Asos expects to return to growth with EBITDA margin around pre-COVID levels.

Commenting on the full year trading, José Antonio Ramos Calamonte, Asos CEO 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 30 percent, significantly improved the core profitability of the business, strengthened our balance sheet, and refreshed our leadership team."

Asos reports sales decline and loss in challenging FY23

The company said in a release that the results reflect a challenging market backdrop characterised by weak consumer sentiment and high inflation; alongside delivery of the Driving Change agenda, which included wide-ranging actions to improve the business's profitability and increased financing costs, including those associated with the refinancing announced in May 2023.

The company’s sales in the UK declined by 13 percent against a difficult consumer backdrop characterised by high inflation and weak sentiment, particularly among the younger Asos demographic and deteriorated further in the summer months as challenging weather conditions impacted the wider apparel sector.

The company added that sales in the EU were down 4 percent as ABV growth of 7 percent partially offset 9 percent lower order volumes. On a country level, Asos saw the Netherlands and Southern Europe outperform, while Scandinavia and Rest of European countries were weaker in response to the more aggressive profitability measures being implemented. Core European geographies of France and Germany traded below the EU average but broadly in line with the local markets.

Total US sales fell by 14 percent. Wholesale performed well relative to the rest of the segment. Rest of world sales fell by 16 percent excluding Russia from the base period, reflecting widespread profitability measures outside the company’s core geographies from January onwards. From a country perspective, Asos further said, the Middle East and North Africa (MENA) performed well while Australia and Asia Pacific (APAC) were more challenging.