ASOS (ASC) on Wednesday reported a markedly weaker half-year financial outcome, though the online retailer said its turnaround plan is progressing.
The shares were down 12% at 561.03p each in London on Wednesday morning, the worst FTSE 250 performer. For the six months to February 28, revenue declined by 8.2% to £1.84 billion from £2 billion a year earlier. Its pretax loss widened to £290.9 million from £15.8 million a year ago.
ASOS said it is committed to ending the financial year with a better inventory position.
"In addition to widespread cost of living concerns and their impact on discretionary spend, consumers have returned to stores post-pandemic causing online penetration to step back in the short-term," ASOS added.
ASOS said its gross margin fell to 36.1%, from 43.1% a year earlier. Its adjusted gross margin was largely flat year-on-year at 42.9%.
Back in October, ASOS announced a turnaround plan. It said it would look to improve inventory management, reduce its costs and "reinforce" its leadership team and culture. The plan was one of Jose Calamonte's first acts as chief executive.
"Our focus is on improving our core profitability … against some very challenging trading conditions," CEO Calamonte said on Wednesday.
Calamonte added: "I am very confident of our return to sustainable profit and cash generation in the second half of the year and beyond."
ASOS cautioned its free cash outflow for the year will be £100 million, the bottom of guidance range which starts at breakeven.
ASOS shares are considered to be significantly undervalued, according to Morningstar analysts.