FILE PHOTO: A keyboard and a shopping cart are seen in front of a displayed ASOS logo in this illustration. REUTERS/Dado Ruvic/Illustration
LONDON: British online fashion retailer ASOS reported a 15% fall in fourth-quarter sales and forecast earnings around the bottom of its guided range but said it was still making progress with its turnaround plan.
The group led by CEO José Antonio Ramos Calamonte announced an overhaul of its business model last October after the economic downturn and a string of operational problems hammered its profits and shares.
Ramos Calamonte's strategy is to prioritise profit over top-line growth by reducing the amount of stock ASOS carries, cutting costs and improving its cash position.
ASOS said the fourth quarter sales decline was in line with guidance, with a stronger start to the period followed by a weaker performance in July and August amidst a deterioration in the UK clothing market.
It said second half earnings before interest and tax (EBIT) were expected to come in towards the bottom of the previously guided 40 million pounds to 60 million pounds ($49-$73 million) range with free cash inflow 90 million pounds below expectations, due to what it said were timing effects that would soon reverse.
Its shares fell 2% in early trading. The stock was already down by 42% over the last year.
"We have reduced our stock balance by circa 30%, significantly improved the core profitability of the business and generated cash against a very challenging market backdrop," said Ramos Calamonte.
ASOS's fourth quarter sales were down 16% in the UK, down 7% in the European Union and down 19% in the United States.
Rivals Primark, Next and JD Sports Fashion have all reported positive updates this month, while official data showed UK retail sales rose in August. - Reuters
