ASOS Share Price Plunged 9.24% on FY23 Loss, Weak Forecasts

The ASOS plc (LON: ASC) share price plunged 8.74% after releasing its final results for the full year ended on 3 September 2023. The company reported an 11% decline in revenues on a constant currency basis to £3.5 billion, down from £3.9 billion.

The fast fashion company warned that it was expecting its revenues to decline by between 5% and 15% in the financial year ended in September 2024. The company’s UK sales fell 13%, while its pre-tax losses increased to £296.7 million from a £31.9 million loss in the previous year. 

The company successfully reduced its stock levels by approximately 30%, which not only improved operational efficiency but also contributed to cost savings. The profit per order saw a remarkable increase of over 30%, indicating a more profitable business model and enhanced revenue generation.

ASOS took steps to refinance its balance sheet, bringing much-needed stability by eliminating profit-based covenants that may have previously restricted financial flexibility. A leadership team overhaul injected new energy and expertise into the organisation, positioning it for future growth and success.

A significant 84% of the approximately £1.1 billion worth of stock carried forward was successfully cleared throughout the year, streamlining the inventory and reducing carrying costs. Stock operating under the new commercial model in the second half of the year showed more robust sell-through rates, indicating a more effective approach to sales. 

Introducing a Test & React pilot for high-fashion products resulted in approximately 500 options with lead times of around two weeks, facilitating faster response to market demand. With a solid foundation, the company's priorities for FY24 will revolve around a strategic shift “Back to Fashion.” 

José Antonio Ramos Calamonte, the ASOS CEO, said: “FY23 was a year of good progress for ASOS in a very challenging environment, and I am proud of what the business has achieved. We have reduced our stock balance by c.30%, significantly improved the core profitability of the business, strengthened our balance sheet, and refreshed our leadership team. Encouragingly, the stock that was brought in under our new commercial model over the summer months has performed strongly, and this gives us the confidence to accelerate the rollout of our new processes.”

ASOS share price. 

The ASOS share price plunged 9.24% to trade at 359.3p from Tuesday’s closing price of 395.9p.