UK's ASOS' revenue declines 16% to $3.74 bn in FY24

Notably, free cash flow showed a significant positive shift, with an inflow of £37.7 million (about $48.7 million), a turnaround of £250.7 million from the prior year. The company's statutory results further illustrate its transformation, with group revenue down 18 per cent to £2.9 billion and an operating loss increase of £83.4 million, ending at £331.9 million (around $428 million), the company said in its financial statement.

ASOS attributes these mixed results to a strategic shift prioritising profitability over revenue growth. Highlights include a new commercial model that prioritises ‘Test & React’, which allows rapid scaling of in-demand products, now accounting for over 10 per cent of own-brand sales. Fulfilment flexibility has also doubled, with order unit economics showing a 28 per cent improvement over FY22.

The company’s stock transition, key to reducing aged inventory, has led to a near 50 per cent reduction in stock levels since FY22. Inventory management measures have resulted in over 80 per cent of current stock being less than six months old. This focus on ‘newness’ has increased sales of fresh products by 24 per cent year-on-year, despite only a 6 per cent increase in overall stock. Conversely, a 30 per cent drop in sales of older inventory has had a temporary impact on revenue.

ASOS recently fortified its balance sheet through a comprehensive refinancing strategy, alongside proceeds from a new joint venture with Topshop and Topman. This development is expected to bolster future growth, supporting the introduction of the Topshop platform and the launch of a loyalty programme in FY25, the statement added.

Chief executive officer José Antonio Ramos Calamonte said: “We achieved our key priorities for the year, significantly reducing our inventory position, while generating positive adjusted EBITDA and free cash flow. Following the year end, we further strengthened our balance sheet with our Topshop Topman joint venture and our refinancing. Our product is now in the strongest position it has been in years, with the right level of newness to excite customers, and we have fundamentally improved our profitability through a relentless focus on operational efficiency. With these solid foundations in place, we can focus on delivering experiences that delight our 20 million customers. There is much work to do, but we have already seen our efforts rewarded with new product sales increasing 24 per cent YoY over the last three months. I am energised by the progress we have made so far and excited for the next phase of our journey.”

Looking forward, ASOS aims to enhance its full-price sales mix, projecting a gross margin increase of over 300 basis points to reach more than 46 per cent. Adjusted EBITDA is expected to grow by at least 60 per cent, reaching between £130 million and £150 million (approximately $167 million to $192 million), reflecting contributions from the Topshop/Topman joint venture. The company anticipates a neutral free cash flow position, with capital expenditure expected at around £130 million and cash interest costs at approximately £35 million.

In the mid-term, ASOS is committed to sustainable growth, projecting revenue increases alongside gross margins approaching 50 per cent and an adjusted EBITDA margin near 8 per cent. The company’s leadership underscores that these gains should comfortably cover capital expenditure, interest, taxes, and leases, paving the way for stable, long-term profitability.

As ASOS enters FY25, its strategic focus is firmly on enhancing customer satisfaction, doubling its ‘Test & React’ initiative, and continuing innovation through technology transformation and targeted partnerships with new brands.

Fibre2Fashion News Desk (KD)