ASOS PLC (LSE:ASC) has said it delivered “significant progress” in its turnaround plan despite posting a slip in revenues in the four months to 31 December 2022.
In a trading update, the online fashion retailer said that as part of its 'Driving Change' agenda, profitability measures in excess of £300mln had been identified for the current financial year.
The benefits of these are expected to accelerate in 2023 and should offset inflation and normalisation of return rates in the second half, generating an improvement in profitability, the company said.
More than half of the £100-130mln of stock identified to be written off has also already been physically removed from ASOS warehouses, it added, with the group on track to reduce inventory levels by 5% in the first half.
Guidance was kept unchanged for full-year free cash flow of between a £100mln loss and £0mln, with improved profitability and cash generation expected in the second half and beyond.
"We have made good early progress against a number of measures to simplify the business, including re-positioning our inventory profile, reviewing our operational model in our top markets and reducing our cost base,” said chief executive José Antonio Ramos Calamonte in the update.
“While there is more to do, I am pleased by the progress made in this period and am confident in the direction we are going," he added.
Total group revenue was down 3% in the four months to 31 December 2022, in line with expectations, although UK sales were down 8%, and were particularly low in September following national news flow, and in December, which was impacted by delivery problems following Royal Mail strikes, ASOS said.
Calamonte outlined four steps to turn the business round in the company's full-year results reported in October. These comprise renewing its commercial model and improving inventory management; simplifying and reducing its costs profile; ensuring a robust and flexible balance sheet; reinforcing the leadership team and refreshing the culture.