Sales at ASOS, the British retail giant, decreased by 7 per cent to £ 1.84 billion in the six months ending on 28th February 2023, and pre-tax losses increased to £ 290.9 million. Despite these declines, the online fashion juggernaut maintained that its turnaround plan was on track.
The company said that the sales decline was caused by a difficult trade environment and “deliberate actions” that included reduced markdowns, a narrower product range, and lower marketing expenditures.
These actions were believed to be responsible for 50 per cent of the sales decline since December. As the business adjusts its focus to increasing the bottom line rather than top-line growth, certain actions have been taken to improve ‘order economics’ and profitability.
According to the company, sales were down 10 per cent in the UK, flat in Europe, 7 per cent in the US, and 12 per cent worldwide. Different trading environments and ‘profit actions’ that were unique to each country were used to explain the variations in results across the territories.
While UK sales had decreased, ASOS reported that it had increased market share within its core 18 to 35-year-old demographic and was taking a higher portion of its fashion spending.
The reported loss of £ 290.9 million was made up of £ 203.5 million in adjusting items, mostly related to the company’s ‘Driving Change’ agenda. These items included stock write-offs totaling £ 128.2 million and non-cash property impairments totaling £ 49.4 million as a result of closure costs related to the shrinking of its headquarters and logistics footprint.
It claimed that the trend in its gross margin was positive. Although it reported unchanged gross margin for the period, lower freight and duty rates caused it to improve by more than 300 basis points year-over-year in February, March, and April. Stock levels have decreased by 9 per cent, which is more than the 5 per cent reduction that was anticipated.
CEO José Antonio Ramos Calamonte said: “Our focus is on improving our core profitability, prioritising order economics over top-line growth and I am pleased with the strategic and rapid operational progress the business has made in the first half of the financial year, against some very challenging trading conditions.”
