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Asos has failed to capitalise on the festive season as revenues for the four months ended 31 December fell by 3%, reflecting tough trading conditions, delivery disruptions and weak consumer sentiment.
According to the online fashion giant, it expects the “volatile” trading of the period to continue through the next financial year, despite basket economics proving “resilient”.
Over the period, UK sales fell by 8%, again reflecting weak consumer sentiment. This was particularly evident in December, where disruptions across the delivery market affected trading. This led to earlier cut-off dates for Christmas and New Year deliveries, and saw Asos reduce its marketing spend in response.
In addition, the group noted there was a strong comparative period in December 2021, as the Omicron Covid variant boosted online shopping the previous year.
Elsewhere, active customers remained flat over the period at 25.5 million, which was said to reflect the annualisation of benefits of pandemic tailwinds to customer acquisition.
Nonetheless, the group said “significant” progress had been made against its Driving Change agenda, with profitability measures identified for FY23 in excess of £300m.
It added it was on track to reduce FY22 year-end inventory levels by around 5% by the end of H1 FY23, with a further improvement from increased stock turn expected in the second half of the year.
Its guidance for a full-year cash outflow of (£100m) – £0m remains unchanged, with the group expecting “significantly improved” profitability and cash generation in H2 FY23 and beyond, following a loss in the first half of this year.
José Antonio Ramos Calamonte, CEO, said: “We are undertaking necessary strategic and operational changes, with our focus shifting from prioritising top-line growth to building a more relevant and competitive fashion business with a disciplined approach to capital allocation and ROI. At the same time, we are working to reinforce our credibility as a leading destination for our fashion-loving customers.
“We have made good early progress against a number of measures to simplify the business, including re-positioning our inventory profile, reviewing our operational model in our top markets and reducing our cost base. While there is more to do, I am pleased by the progress made in this period and am confident in the direction we are going. We retain ample balance sheet flexibility and reiterate our expectations for FY23.”
