// Asos sales slip 14% as the embattled fashion giant focuses on profits
// The group has returned to profitability with core earnings up more than £20m year-on-year
Asos has hailed a return to profitability as its turnaround strategy delivers, despite posting a 14% drop in revenue.
The online fashion giant said adjusted earnings before interest and tax went up more than £20m on year in the three months ended May 31, putting the retailer on track to achieve adjusted EBIT guidance of £40m to £60m in the second half of the year.
This was aided by roughly £200m of profit optimisation and cost savings in the year to date, with £300m of benefits targeted for the full year.
Revenue for the period slipped to £858.9m from £964.1m, a decline the company said reflected “deliberate actions on capital allocation to improve profitability”.
The group, whose shares have lost 71% of their value over the last year, saw sales plunge about 15% in March and April when it reported a first half loss and guided to a “low double digit” sales decline for the second half.
According to a filing today, Frasers Group has raised its stake from 9.9% to 10.6%, after holding a 7.4% stake at the start of last week.
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Chief executive José Antonio Ramos Calamonte unveiled an overhaul of the ecommerce giant’s business model last October after a string of operational problems and raging inflation hammered its profits.
Calamonte said: “We continue to focus on making Asos the best possible destination for our fashion-loving customers. At the same time, we are delivering on our plan to turn the business around: to right-size our stock; to generate cash; to reduce our net debt; and to structurally improve our profitability.”
“I am confident in the direction we are going, we have restored profitability in the period and made good progress in clearing through our inventory to generate cash. We retain ample balance sheet flexibility and reiterate our expectations for improved profitability, cash generation and reduction in net debt in H2 FY23 and beyond.”
Frasers Group has lately raised its stake in Asos to 9.9% as speculation over a takeover of the embattled online fashion retailer mounts.
Earlier in June, the online fashion giant was relegated from the FTSE 250 index causing its shares to hit a 12-month low and leaving it vulnerable to a potential takeover.
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