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ASOS: full-year profits decline as expected, cautious optimism ahead

ASOS’ full-year results haven’t promised a return to top line growth, but it’s hoped inventory management efforts will boost profitability this year.
ASOS - Sales suspended in Ukraine and Russia

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ASOS’ underlying revenue fell by 16% to £2.9bn on a like-for-like basis, in line with previously downgraded guidance. Increases in average basket value were not enough to offset falling customer and order levels.

Underlying cash profit (EBITDA) was at the top end of the group’s prior expectations, but still fell 44% to £80.1mn impacted by lower sales and heavy discounting to clear inventory.

Free cash flow improved from an outflow of £213mn to an inflow of £37.7mn, helped by much higher operating cash flow and lower investment expenditure. Net debt, including lease liabilities, remained broadly flat at £0.6bn.

In the new year, gross margin is expected to improve by at least three percentage points to above 46%. Underlying cash profits are expected to grow more than 60% to between £130-150mn.

The shares fell 6.6% in early trading.

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HL view to follow.

ASOS key facts

All ratios are sourced from Refinitiv, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.

This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Refinitiv. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment.No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.Non - independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place(including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing.Please see our full non - independent research disclosure for more information.
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Written by
Aarin Chiekrie
Aarin Chiekrie
Equity Analyst

Aarin is a member of the Equity Research team. Alongside our other analysts, he provides regular research and analysis on individual companies and wider sectors. Having a keen interest in global economics, he knows how macro-events can impact individual companies.

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Article history
Published: 5th November 2024