ASOS’s fall from grace continues with another year of losses and falling revenues. Once revered as the UK’s leading technology company, ASOS is facing multiple headwinds that are only showing marginal signs of improvement.
ASOS shares were down over 6% on Friday after releasing full-year numbers that revealed a 14% decline in revenue and an adjusted loss before tax of £98m.
“ASOS’s latest results continue to show an uphill battle to execute a turnaround with shares down sharply this morning,” said Adam Vettese, market analyst for investment platform eToro.
“The company missed profit expectations, largely due to subdued consumer demand, reflecting broader economic worries and tighter household budgets. Many customers appear to be delaying purchases, or waiting out for deeper discounts which is a habit ASOS would do well to avoid relapsing into.”
Looking past the disappointing headline numbers, there were some signs of improvement. Gross margins increased to 47.1% from 43.4% and the £98m loss before tax was an improvement on last year’s £126m loss.
“Long-suffering ASOS shareholders will hope that the improvement in gross margins in today’s numbers signals better times ahead,” explained Chris Beauchamp, Chief Market Analyst UK at IG.
“Crucially the firm expects this trend to continue too. While its perhaps not the week to go big on AI, the theme made an appearance in these numbers and might help drive sales. We have seen too many false dawns in ASOS over the years, but perhaps this morning’s numbers mark the start of a recovery back to the highs of a year ago.”
The progress in losses and margins was driven by a focus on higher-value sales and lower discounting. But lower overall sales aren’t anything to cheer about.