ASOS reports first-half loss as shoppers cut back

LONDON (Reuters) -ASOS, Britain’s one-time poster child for the shift to online fashion retailing, swung to a first-half loss, hurt by a squeeze on household budgets and elevated product returns but said it was confident of a return to profit in the second half.

The group, which announced a major restructuring last October, said on Wednesday it made an adjusted loss before tax of 87.4 million pounds ($110.3 million) in the six months to Feb. 28, versus a profit of 14.8 million pounds in the same period last year.

Revenue of 1.84 billion pounds was down 10% on a constant currency basis.

ASOS and rival Boohoo grew rapidly in recent years as 20-somethings around the world snapped up their fast fashions, and demand surged again during the pandemic when high street rivals were closed.

But supply chain issues, competition from rivals like Shein and a cost-of-living crisis have weighed on their business models.

British households are currently contending with the highest inflation in western Europe, running at 10.1% in March.

Shares in ASOS have halved over the last year, with some analysts fearing it may need to raise further equity.

ASOS ended the half with cash and undrawn facilities of 408.6 million pounds.

But for the full year it forecast a free cash outflow of around 100 million pounds, around the bottom end of previous guidance.

Assuming no improvement to the external trading environment, it forecast a “low double-digit” decline in second-half sales, but with core earnings of 40-60 million pounds, reflecting its focus on profitable sales.

I am very confident of our return to sustainable profit and cash generation in the second half of the year and beyond,” CEO José Antonio Ramos Calamonte said.

At the statutory level, ASOS reported a first-half pretax loss of 290.9 million pounds, including 203.5 million pounds of one-time items relating to the overhaul of its business model.

($1 = 0.7923 pounds)

(Reporting by James Davey; editing by Sarah Young and Sharon Singleton)