ASOS (ASC) on Wednesday said its full year loss widened as revenue fell by double digits, but said it expects a slow return to growth.
Shares fell 11% to £3.53 each in London on Wednesday morning. Morningstar analysts think the shares have a fair value of £19.10, making Asos one of the most undervalued European shares under Morningstar coverage.
The online fashion retailer said in the year ended September 3, pretax loss widened to £296.7 million from £31.9 million at August 31, 2022, as revenue fell 10% to £3.55 billion from £3.95 billion a year ago. Results were delayed from last week as auditor PwC needed to complete testing.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell 32% to £124.5 million from £183.9 million.
Shares are off 33% this year and have been volatile, hitting £9.82 in February before falling sharply from May onwards.
Looking ahead, the fashion firm said it expects a 5% to 15% decline in its sales for the first half of financial 2024, and a return to growth in the final quarter. It also anticipates positive EBITDA. As for financial 2025, ASOS said it expects to deliver revenue growth and return its EBITDA margin to pre-Covid levels of around 6%.
Chief executive officer Jose Antonio Ramos Calamonte said: "[Financial 2023] was a year of good progress for ASOS in a very challenging environment, and I am proud of what the business has achieved. We have reduced our stock balance by [around] 30%, significantly improved the core profitability of the business, strengthened our balance sheet, and refreshed our leadership team.
"Encouragingly, stock that was brought in under our new commercial model over the summer months has performed strongly, and this gives us the confidence to accelerate the rollout of our new processes. As such, we are taking decisive action in [financial 2024] to clear stock brought in under our old model while substantially improving our speed to market and investing in our brand, reminding our customers what we're really about: fashion."