ASOS packages
ASOS insisted it is ‘readying for a profitable return to growth’ in full year 2025 / Image source: Adobe
  • Annual loss widens to £300 million
  • ASOS insists turnaround is on track
  • Promises profitable growth return in 2025

Online fast fashion retailer ASOS (ASC) reported a dramatic improvement in free cash flow for the year to 3 September 2023, insisted its turnaround is on track and said it is ‘readying for a profitable return to growth’ in full year 2025.

Yet shares in the site for fashion-loving 20-somethings cheapened the best part of 10% to 359.5p as investors focused on gloomy full year results, ASOS’ ballooning debt as well as a disappointing full year 2024 sales guidance cut.


ASOS’ annual results were broadly in line with estimates, revealing a widening of pre-tax losses from £31.9 million to £296.7 million which included a massive £133.2 million stock write down.

Group sales were down 11% to £3.54 billion, with ASOS suffering revenue declines in all regions as the cost of living squeeze hurt consumer sentiment, particularly among the younger ASOS demographic.

On the positive side of the ledger, gross margins improved by 60 basis points to 44.2%, second half adjusted earnings before interest and tax was up more than 100% year-on-year and full year free cash flow grew by more than £125 million thanks to ‘material improvements to core profitability and strong inventory management’.


Embattled but recently-refinanced, ASOS expects to return to growth in full year 2025 with an EBITDA (earnings before interest, tax, depreciation and amortisation) margin around pre-COVID levels of 6%.

However, the fashion group warned profitability in the current financial year will be negatively affected by ongoing efforts to clear excess stock and guided for sales to fall by between 5% and 15%.

CEO José Antonio Ramos Calamonte said his charge ended full year 2023 ‘a smaller but more resilient business’ and stressed ASOS ‘remains one of the leading players in online 20-something fashion. While the market has evolved and our model has adapted accordingly, we mustn’t lose sight of our core purpose.’

Calamonte continued: ‘Our strength in the past came from our relentless focus on bringing the most exciting fashion to consumers with a focus on inspiration and style. By doubling down on that winning formula and evolving our culture to place speed at the heart of everything we do, we can win again.’


Cautious over ASOS with a ‘sell’ rating on the stock, Shore Capital said the fallen online retailer is ‘undergoing a significant restructuring, involving cost adjustments and an overhaul of its brand portfolio. The potential sale of Topshop could further compound the challenges facing the company, casting doubt on future sales growth and profitability.’

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AJ Bell investment director Russ Mould commented: ‘So much for ASOS being a disruptor in the fashion industry – its fifteen minutes of fame have long gone and the business is now having to rethink its strategy.

‘It’s easy to understand how ASOS got into this mess. Consumer shopping habits have changed – after the heyday of Covid when everyone was ordering goods because they were bored at home, now there is more consideration made to purchases, something that’s been exacerbated by the cost-of-living crisis. Heightened competition from the likes of Shein have also presented shoppers with cheaper alternatives.’

Mould added: ‘So where next? A plan is in place to focus more on profitable sales, but it will take some time to wash out the dregs of its old business model from the system. There is no response to speculation it might sell the Topshop brand, but such a deal would make sense given the circumstances. It could provide a welcome cash injection to help pay down debt.’

Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (James Crux) and the editor of the article (Martin Gamble) own shares in AJ Bell.


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Issue Date: 01 Nov 2023