UK’s ASOS battling for turnaround in tough market

By Sarah Young

LONDON (Reuters) -Britain’s ASOS said it was confident it would return to growth in 2025, but last year’s decline and tough competition showed the scale of the challenge the online fashion retailer is facing, sending its shares to their lowest in five months.

ASOS has been trying to reinvent itself for the last two years after it fell out of favour with its 20-something target customers and became bogged down with excess stock. Its turnaround plan has, however, coincided with the rise of lower cost Chinese-founded fast fashion giant Shein and Chinese online retailer Temu.

The company said on Tuesday it wrote off 100 million pounds ($130 million) of old stock in the financial year to Sept. 1 and its adjusted earnings fell by 36% compared to the previous year, with its number of active customers down by 16%.

Its shares traded down 8% in early deals, hitting their lowest level since May.

“This is a journey that takes some time,” Chief Executive Jose Antonio Ramos Calamonte told reporters, adding that the company’s historic stock problem was now completely behind it.

He said he was confident that the group was moving in the right direction with its prioritisation of profitable growth over volumes taking effect, and its focus on producing exciting new trends quickly starting to show results.

New product sales had risen 24% over the last three months compared to last year, he said, with burgundy a popular colour this autumn, and baggy jeans, oversized T-shirts and animal prints also selling well.

What we’re seeing is a company that, while making good progress in its strategy, is still suffering from large losses, weak customer metrics, and a balance sheet that has a bit of short term liquidity, but not necessarily gives reassurance for the medium to long term,” Shore Capital analyst Katie Cousins said.

For its financial year to September 2025, ASOS said it expects adjusted earnings (EBITDA) to jump at least 60% to between 130 million and 150 million pounds, up from 80 million pounds for 2024.

($1 = 0.7702 pounds)

(Reporting by Sarah Young; Editing by Sachin Ravikumar and Emelia Sithole-Matarise)