Asos returns to profitability
Digital clothing retailer, Asos, has returned to profitability as a new commercial plan sees it buying less stock than in the past.
Asos’s new stock strategy involves purchasing less stock and enabling the retailer to reduce inventory volumes by 15% compared to FY22. Its target is to reduce stock by 20% in financial year 2023.
It posted a £20m rise in earnings before interest and tax in the first quarter of the year to 31 May.
The retailer said it was on track to deliver earnings of between £40m to £60m in the first half of the year.
This news comes as Frasers Group raises its stake again, from 9.9% to 10.6%. Just last week the group increased its total holdings in ASOS to 8.8% and increased them again on Thursday.
Earlier this month, 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.
José Antonio Ramos Calamonte, chief executive officer, 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.”
He added: “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.”