Rebuilding for the Future

ASOS has reported a strong strategic turnaround despite facing financial challenges in the fiscal year 2024. Ending on September 1 with an adjusted pre-tax loss of £126 million, the UK-based online fashion company expresses confidence it has overcome its main hurdles.

New Vision, New Growth

The business implemented significant adjustments during the year, including a 50% reduction in inventory. This strategic shift allowed ASOS to refocus on new, full-price products rather than discounted stockpiled items.

The introduction of the “Test & React” model enabled the company to accelerate product development, making it possible to move from design to sale within three weeks. As a result, sales of new products saw a 24% increase in the last quarter of the year.

Leadership Perspective

ASOS CEO José Antonio Ramos Calamonte acknowledged the financial strain but emphasized the company’s solid position moving forward. In his statement, Calamonte expressed pride in achieving key objectives, including reduced inventory and improved operational efficiency. He highlighted the company’s strengthened product offering, ready to deliver on exciting customer experiences.

Fiscal Projections

For 2025, ASOS anticipates improving its gross margin to exceed 46% and achieving adjusted EBITDA growth of at least 60%, projecting between £130 and £150 million. This forecast relies on the recent increase in full-price product sales and the creation of a new joint venture with Topshop and Topman, which enhances the company’s balance sheet.

Market Response

The announcement received mixed market reactions. Following the results, ASOS shares fell 7% on the London Stock Exchange, reflecting investor caution given current losses and the 18% decline in income for 2024. This income decline largely results from the strategy of liquidating old stock at lower prices to clear cash flow, thus impacting financial short-term results.

Long-Term Strategy

Undeterred by current financials, ASOS prioritizes sustainability and profitability, focusing on strengthening relationships with consumers. To achieve this goal, they will implement measures such as a loyalty program, new collaborations with brands, and refine their user experience platform. The company projects a clear path to achieving this vision through revenue growth, near-50% gross margin, and an adjusted EBITDA margin of 8% in the medium term.