Fast fashion giant Asos has said its plan to boost profitability is well on track despite a significant revenue fall in the last quarter.
The firm said it had also reduced its marketing outreach to customers who didn’t generate profitability.
Asos, which is in the midst of a turnaround plans following a season of losses, said it reduced its inventory by circa 30 per cent year-on-year, as part of its strategy to turn stock into cash.
Over the last two years the group said it had a build of clothes and other items – describing it as a “mismatch between our intake and sell-through” – this led to £130m of stock being written off in 2022.
The group also reported a 15 per cent decline in group sales, not helped by an unusually wet July which impacted trading.
Despite the decline in sales, Asos said it expects the fourth quarter to be profitable, unlocking around £300m through its cost saving initiatives.
José Antonio Ramos Calamonte, chief executive officer, said “In our P3 trading statement I explained the challenging position we were in as we entered FY23: we had more stock than we’d like, our buying processes were too deep and too slow, we lacked profitability and we had tension in our balance sheet with earnings-based covenants on our debt.”
“To address these issues, we refinanced our balance sheet and rebuilt the leadership team. I also explained that we had begun to pivot to a new commercial model that puts speed at the heart of everything we do, bringing the most relevant and exciting fashion to our customers and making our operations more profitable and more cash generative.”