Asos, a leader in the online fast fashion industry, reported a first-half loss due to a strain on customers’ budgets and a high rate of product returns. Despite the setback, the company is confident of a return to profitability in the second half.
For the six months ending February 28, Asos had an adjusted loss before tax of £87.4m (€100m), compared to a profit of £14.8m the year prior. In terms of revenue, the company saw a 10% decrease on a constant currency basis, amounting to £1.84bn.
In the past few years, Asos and Boohoo have grown substantially as young adults around the globe have purchased their trendy clothing. However, the pandemic has caused a few issues in the supply chain and competition from other retailers like Shein has posed a challenge.
On top of that, inflation across the eurozone is still high, standing at 6.9%. This has caused a significant drop in Asos’ stock prices over the past year, with some investors questioning its ability to raise additional equity.
In regards to cash and undrawn facilities, the company had £409m in the first half. For the full year, Asos is forecasting a free cash outflow of around £100m, which is near the lower end of previous estimates.
José Antonio Ramos Calamonte, the CEO of Asos, stated that he is certain the organization will be able to “return to sustainable profit and cash generation in the second half of the year and beyond.” At the statutory level, the company reported a first-half pretax loss of £291m, reflecting the costs related to restructuring its business model.
