British fashion retailer ASOS has posted a total revenue of £1,336.5, down 3 per cent, in the four months ended December 31, 2022, as compared to the corresponding period of the previous fiscal. The company’s Europe sales grew 6 per cent year-on-year (YoY), driven by improved basket economics supported by price increases, and customer growth, with the Ireland and Netherlands notably strong.
The company’s UK sales in the last four months of 2022 were down 8 per cent YoY, reflecting weak consumer sentiment. This was particularly significant in September, which was impacted by national news flow, and December, which was affected by disruption in the delivery market. This resulted in earlier cut-off dates for Christmas and New Year deliveries.
ASOS’ US sales fell 2 per cent in P1 FY23, with slower wholesale performance acting as a drag on retail sales, while ROW sales fell 10 per cent, reflecting the implementation of a range of strategic measures.
Active customers in P1 FY23 were flat at 25.5 million versus P1 FY22, reflecting the annualisation of benefits of COVID tailwinds to customer acquisition.
Whilst adjusted gross margin (excluding the impact of the previously announced stock write-off) was broadly flat (minus 10 bps to 42.9 per cent), actions taken on pricing and the reduced use of air freight drove an encouraging progression through the period relative to the prior year. Reported gross margin declined by 690 basis points (bps) to 36.1 per cent. A significant improvement in gross margin is expected in H2 FY23.
Adjusted gross margin at H1 FY23 is expected to be similar to P1 FY23. ASOS continues to expect H1 FY23 loss, driven by usual profit phasing, headwinds from inflation and annualisation of elevated return rates. These headwinds are expected to persist into H2 FY23 but will be more than offset by accelerating benefits from Driving Change agenda and previously highlighted tailwind from freight.
