Asos Sees Higher Profit Next Year as Turnaround Gains Ground
Asos Plc expects profit to rise in its next fiscal year as the online fashion retailer’s turnaround starts to take hold.
Asos Plc expects profit to rise in its next fiscal year as the online fashion retailer’s turnaround starts to take hold.
The British clothing platform said efforts to cut costs and reduce a stockpile of unsold clothes were helping to get the business back on track as it reiterated its outlook for the current year.
Cutting the amount of stock it received by 30% in the first half was the “medicine we needed to take,” even though it meant fewer new clothes, said Chief Executive Officer José Antonio Ramos Calamonte.
The shares rose more than 11% in early London trading before easing back slightly, as investors saw signs of improvement. They’re still down 18% this year.
Asos is trying to reverse a slump in sales since the pandemic-era boom for online retailers ended and shoppers returned to bricks-and-mortar stores. The retailer is making progress in clearing old stock through heavy discounts, but that’s putting pressure on revenue, which fell 18% to £1.5 billion in the 26 weeks to March 3.
The company still has to unload old spring and summer clothes, but is confident doing so will help it hit guidance for 2024, Michelle Wilson, chief of staff and strategy, told reporters on a call.
Asos was for many years a stock market darling as shoppers increasingly ordered clothes online. But the shares have fallen 95% since 2018 and the company is one of the most-shorted UK stocks as investors bet it has further to fall.
Last May, it raised £75 million in equity and carried out a debt restructuring to put the business on a better financial footing.
Read More: UK Online Retailer Asos Raises Equity, Refinances Debt
Asos also announced Dave Murray, former chief financial officer of Matches Fashion, will become CFO, replacing interim finance chief Sean Glithero. Murray left Matches Fashion after the company collapsed earlier this year.
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