ASOS annual sales decline but looks ahead to 'sustainable, profitable growth'

ASOS has posted an 18% decline in revenue to £2.9 billion, but remains focused on "sustainable, profitable growth" with the foundations of more agile business now in place.

The online retailer reported a pre-tax loss of £379.3 million for FY24, down from a loss of £296.7 million the previous year.

However, the company progressed its Back to Fashion strategy, with stock clearance complete, a new commercial model embedded, Test & React scaled above 10% of own brand sales and flexible fulfilment doubled.

Its new commercial model is "resonating with customers", with sales of newness up 24% year-on-year from July-September with only 6% higher stock, demonstrating "strong" demand for full-price product.

ASOS emphasised the importance of setting "strong" foundations,  ensuring operations were "efficient" and "effective", and that its efforts were creating value for customers, brand partners, and shareholders.

This meant clearing through old stock, changing its product model to bring customers the "best, most relevant "product, and exiting unprofitable activities to invest into areas that matter most to customers.

As a result, the online retailer said it now remains "confident" in its processes and business resilience to drive sustainable, profitable growth.

ASOS added that the benefits of its new commercial model will become increasingly apparent as its new stock continues to perform, with the decline from lower sales of discounted old and mature stock expected to annualise throughout the year.

ASOS will also continue to focus on taking actions including:

• Doubling Test & React to 20% of own-brand sales.
• Further scaling FF models.
• Adding exciting brand partners.
• Empowering faster innovation through technology and digital product transformation.
• Launching loyalty programme.
• Launching Topshop.com.
• Further tackling the causes of unnecessary returns.

José Antonio Ramos Calamonte, Chief Executive Officer at ASOS, said: "We achieved our key priorities for the year, significantly reducing our inventory position, while generating positive adjusted EBITDA and free cash flow.

"Following the year end, we further strengthened our balance sheet with our Topshop Topman joint venture and our refinancing. Our product is now in the strongest position it has been in years, with the right level of newness to excite customers, and we have fundamentally improved our profitability through a relentless focus on operational efficiency.

"With these solid foundations in place, we can focus on delivering experiences that delight our 20 million customers. There is much work to do, but we have already seen our efforts rewarded with new product sales increasing 24% YoY over the last three months. I am energised by the progress we have made so far and excited for the next phase of our journey."

It comes after ASOS finalised the sale of Topshop and Topman to a joint venture led by Heartland, which represents ASOS shareholder Anders Holch Povlsen and his fashion business Bestseller.

The new joint venture was established following a competitive sale process for the brands and sees Heartland indirectly hold a 75% stake in the joint venture for a £135 million cash consideration.

The remaining 25% stake is held by ASOS Holdings Limited, granting the online fashion retailer certain design and distribution rights for Topshop and Topman in return for a royalty fee, allowing it to continue marketing and selling the two brands online.