Fashion specialist Asos has reported a fall in sales but expects to meet full-year profit expectations as it makes “good progress” with its turnaround strategy.

Jose Antonio Ramos Calamonte

Asos chief executive José Antonio Ramos Calamonte said his turnaround strategy is going to plan

The online apparel group recorded a sales decline of 18% in the 26 weeks to March 3, but said that was ”broadly in-line with guidance” following initiatives to improve profitability and ”right-size” stock levels.

Asos said it is making “good progress” with its ‘Back to Fashion’ strategy, which includes measures to clear old stock and switch to an updated operating model. Asos said it was “ahead on plan” to improve stock efficiency and cut inventory to £600m by year end. 

Asos said its free cash flow was £240m better year on year, on the back of ”improvements in underlying profitability and the clearance of aged stock”, and despite the sales decline delivered its strongest first-half cash performance since 2017.

The retailer reported that it ended the half with a “robust cash balance” of more than £330m. Full-year guidance was unchanged and is expected to include: a sales decline of between 5% and 15%, positive adjusted EBITDA, inventory back to pre-COVID levels, and positive cash generation.

Chief executive José Antonio Ramos Calamonte said: “Asos is becoming a faster and more agile business, aided by the incredible work of our teams to speed up all of our processes and deliver the fashion, quality and prices that our customers want, when they want it.

“I’m excited by the performance of our new collections, while we have also made great progress in monetising inventory that built up over the pandemic and in improving the core profitability of our operations. We have reconfirmed our guidance as we lay the foundations for a more profitable, cash generative business.”