Asos: Losses narrow as e-commerce giant drives turnaround
Struggling ecommerce giant Asos has reported reduced losses as its turnaround plan begins to take shape.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) moved into positive territory at £42.5m in the 26 weeks to March 2, from a loss of £16.3m last year.
Its share price dipped by nearly two per cent in early trades.
Asos’ operating loss improved from £246.8m to £210.1m, while net debt was trimmed from £348.8m to £275.8m.
The company has struggled with a general e-commerce downturn post-pandemic, which has also hit boohoo and Pretty Little Thing, but began a significant turnaround programme in 2023.
“[These results are] the strongest sign yet that our new commercial model is working,” CEO José Antonio Ramos Calamonte said.
“We are driving a significant transformation in profitability… Customers are responding positively to our focus on full-price sales, speed to market, and quality.”
“We look forward to a fantastic pipeline of new products, brands and customer experiences, and remain confident in our ability to deliver sustainable, profitable growth,” Calamonte said.
The company expects gross margin improvement of at least three per cent to more than 46 per cent for the full year, alongside adjusted EBITDA growth of at least 60 per cent, from £130m to £150m.
Robinhood UK lead analyst Dan Lane said: “Total sales are as expected, adjusted earnings have flown past market expectations and gross margins are getting back to where they should be.”
“A missing puzzle piece is free cash flow but, if Asos can start generating cash there might still be life in one of the index’s most disappointing stories over the past few years,” he added.
Asos’ share price has fallen by more than 94 per cent since its pandemic high in April 2021.
“The danger is Asos continues to lose relevance, even with a move offline for the Topshop and Topman brands. That looks to be the right move as customers increasingly want real-world experiences again,” Lane added.
“Making a turnaround even harder is the fact that ASOS is going to have to appeal to consumers already dealing with Awful April and inflation-struck budgets, a considerable hurdle.”
Julie Palmer, Partner at Begbies Traynor, said: “Sadly, ASOS continues to face an uphill battle to regain its footing in the competitive online retail market. With revenue growth remaining elusive, the share price sitting far below its pandemic heights and now the looming threat of tariffs, investors have little to be hopeful about.
“While most of its peers will also be knocked by the tariffs, ASOS faces a particularly arduous journey to re-establish itself as the favoured marketplace for younger online shoppers, many of whom have switched to cheaper or more sustainable options.
“Consumer confidence looks set to remain subdued for some time to come, so ASOS must find a way to adapt to shifting consumer behaviours, volatile global trade policies and carve out a distinctive position to grow its share of the ever changing online retail market.”