- Full-year underlying revenue of £3.5bn, down 11%
- Underlying operating loss of £29.0m, compared to a profit of £44.1m last year
- Net debt rose from £152.9m to £319.5m
Aarin Chiekrie, equity analyst at Hargreaves Lansdown:
“Profitability rather than growth remains the order of the day at ASOS. There were no major surprises in full-year results, revenue had fallen at double-digit rates as the number of active customers shrank 9% to 23.3m. With shoppers clearly struggling with the cost-of-living crisis and looking elsewhere for their latest fix of fashion, ASOS expects these double-digit revenue declines to continue into the new financial year, before turning positive again in the final quarter.
But that’s the least of ASOS’ worries. With net debt and cash outflows rising, an £80m equity raise was needed last year to help shore up the balance sheet. This isn’t usually a good sign for existing shareholders as it waters down their stake in the company. On the flip side, the cash injection has given ASOS some wiggle room to execute its ongoing transformation, and there are some very early signs that it’s bearing fruit.
Despite overall profit coming in lower last year, profit per order was up over 30% as the group streamlined its offering and narrowed its focus on higher-quality, more profitable customers. And good progress has been made in trimming the mountain of excess inventory in ASOS’ warehouses, down around 30% year-on-year. The discounts used to help clear this stock have hurt margins though, and the group turned loss-making. Discounting looks set to continue into the new financial year with more deadwood left to clear. Once this excess inventory pile is off the books, it should deliver a welcome tailwind to group margins, helping management get profitability moving in the right direction again.”
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