Online fashion giant Asos has hailed a return to profitability in its third quarter as evidence that its recovery plan is delivering.
Asos reported adjusted EBIT “up more than £20m year on year” and said it was “on track” to achieve guidance of between £40m and £60m in the second half.
The rise in quarterly earnings came despite a 14% fall in sales to £858.9m, “reflecting deliberate actions on capital allocation to improve profitability”.
Asos has been at the centre of bid speculation and the retailer’s update included a lengthy justification of its turnaround strategy and recent refinancing.
Chief executive José Antonio Ramos Calamonte said: “There is no instant fix and the necessary changes will take some time, but we are making great progress.”
He reported that the focus now is on “right-sizing of stock” to improve Asos’ balance sheet and to continue to improve profitability.
The retailer aims to “turn the stock we have into cash and buy less stock”, improve profit per order and then invest in customer acquisition and lifetime value.
Ramos Calamonte said: “We continue to focus on making Asos the best possible destination for our fashion-loving customers.
“At the same time, we are delivering on our plan to turn the business around – to right-size our stock, to generate cash, to reduce our net debt and to structurally improve our profitability.
“I am confident in the direction we are going. We have restored profitability in the period and made good progress in clearing through our inventory to generate cash.”
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