ASOS swung to a first-half loss, hit by a squeeze on household budgets and forecast a further drop in sales, sending its shares sharply lower.
The stock was down 11 per cent on Wednesday, extending losses over the last year to 57 per cent, after the company forecast a worse than previously expected "low double-digit" sales decline in its second half.
Sales fell 15 per cent in its second quarter, with that trend continuing into March and April.
ASOS led by chief executive José Antonio Ramos Calamonte announced an overhaul of its business model last October. His plan focuses on profitable sales rather than top-line growth.
ASOS forecast second-half core earnings of £40-£60 million (€46-69 million).
"I am very confident of our return to sustainable profit and cash generation in the second half of the year and beyond," Ramos Calamonte said.
ASOS and rival Boohoo grew rapidly as 20-somethings around the world snapped up their fast fashion, and demand surged again during the pandemic when high street rivals were closed.
But supply chain issues, higher product returns, competition from rivals like Shein and a cost-of-living crisis have weighed on their business models.
"The shares will remain under the shadow of balance sheet concerns until ASOS can demonstrate genuine recovery," analysts at Peel Hunt said.
ASOS made an adjusted loss before tax of £87.4 million in the six months to February 28th, versus a profit of £14.8 million in the same period last year.
Revenue of £1.84 billion was down 10 per cent on a constant currency basis.
Some analysts predict ASOS may need to raise further equity, but Ramos Calamonte told Reuters the company has ample liquidity, ending the half year with cash and undrawn facilities of £408.6 million.
For the full year, ASOS forecast a free cash outflow of around £100 million, around the bottom end of previous guidance.
At the statutory level, ASOS reported a first-half pretax loss of £290.9 million, reflecting a £128.2 million stock write-off and other one-time items relating to its restructuring. -Reuters
