Asos’ pre-tax loss widened to 290.9 million pounds in the first half of the year compared to a loss of 15.8 million pounds a year earlier.
The company swung to an adjusted pre-tax loss of 87.4 million pounds compared to a profit of 14.8 million pounds the prior year.
That came as revenue fell 8 percent to 1.84 billion pounds in the six months to February 28. On a constant currency basis, and excluding the impact of Russia, revenue was down 7 percent in the first half of the year.
Asos said the drop reflected both deliberate actions on capital allocation to improve profitability and a challenging trading backdrop.
“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,” said chief executive officer José Antonio Ramos Calamonte in a statement.
“While some of these changes have impacted short-term sales growth, there are many causes for optimism as we progress through the second half of the year,” he said.
Revenue hit across geographies
Breaking it down by market, sales in the company’s home market of the UK were down 10 percent, in Europe were flat, in the US were 7 percent, and in the rest of the world were down 12 percent.
Adjusted gross margin remained broadly flat at 42.9 percent. It showed progress over the period, with February adjusted gross margin up more than 300 bps. Adjusted EBIT loss for the period was 69.4 million pounds
Commenting on the current trading, the company added that sales momentum in the second quarter, which was down 15 percent CCY excluding Russia, has broadly continued into March and April, with approximately half of the sales decline driven by planned driving change initiatives.
Asos will retain its focus on profitable sales in the second half and its commitment to exit the year with a cleaner inventory position, it said.
If there is no improvement to the external trading environment, expectations for the second half include sales excluding Russia to decline by low double-digits; an inventory reduction of 20 percent; and adjusted EBIT of between 40 million pounds to 60 million pounds.