The ASOS plc (LON: ASC) share price dropped 6.65% after releasing a trading statement for the 53 weeks to 3 September 2023, which marks the end of its 2023 financial year. After introducing the same twelve months ago, the fashion company continued progressing on its Driving Change agenda.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.
The fashion company revealed that its adjusted H2 EBIT rose more than 100% annually, improving its annual cash flow by over £140 million, despite its revenues declining by double-digit percentages. The impressive figures were driven by robust inventory management and material improvements to its core profitability.
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The company’s sales fell 15% YoY in P4, aligned with its guidance, with a robust start to the period accompanied by weaker performance in July and August as conditions deteriorated within the UK clothing market. The company made a profit in P4 despite the significant decline in sales.
ASOS has now realised approximately £300 million of profit improvement and cost savings in line with its fiscal 2023 target outlined within the Driving Change agenda. The move had increased customer order profitability by over 35% annually.
The company’s adjusted gross margins increased by 150bps (1.5%) in H2, missing its target guidance of 200bps. The lower figure was fueled mainly by lower duty and freight costs. It was particularly offset by prudent promotions investment to reduce stock amid a difficult trading environment.
ASOS revealed that its inventory was down about 30% due to the above actions, marking a crucial milestone to help the company transition to its new commercial business model in fiscal 2024 and beyond.
The company had cash and undrawn facilities worth about £430 million at the year’s end.
José Antonio Ramos Calamonte, Chief Executive Officer, said: “ASOS has delivered on the Driving Change agenda and, as a consequence, is a leaner and more resilient business twelve months after its launch. We have reduced our stock balance by c.30%, significantly improved the core profitability of the business and generated cash against a very challenging market backdrop. We continue to focus on bringing the best fashion and the most engaging proposition to our customers as we make progress on our journey to sustainably profitable and cash-generative growth.”
Asos share price.
The ASOS share price fell 6.65% to trade at 361.0p, from Monday’s closing price of 386.7p.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.