ASOS PLC (LSE:ASC) shares, down as much as 7% in early trading, clawed back ground through the morning as analysts argued the latest numbers show a retailer that is finally putting profit back at the centre of its model.
Shore Capital’s take is that the full-year figures are “higher profits on lower sales”, a theme that has now become a deliberate strategy rather than an accident.
Revenue slipped 14% to £2.47 billion, with the US the weakest region, but that slide was well telegraphed.
ASOS has been pruning low-value, discount-driven sales and nudging shoppers towards full-price items, a shift that shows up clearly in the data: active customers fell 14%, but basket values rose 5% and gross margin jumped to 47.1%.
The main comfort for the market is operational. Adjusted EBITDA surged 64% to £131.6 million, debt dropped sharply, and a refinancing after year-end gives the group more room to breathe.
Shore Capital points to meaningful progress behind the scenes: faster own-brand production through its Test & React model, supply-chain savings of about 20%, and early signs that customer initiatives (including its ASOS World loyalty scheme) are getting traction.
UK new customers were up 10%, and the loyalty programme is thought to have passed 1.6 million members.
The broker likes the direction of travel but wants firmer evidence that engagement will stabilise the top line.
Guidance for the year ahead is steady: more gross-margin gains and EBITDA of £150–180 million.
On around four times EBITDA, Shore Capital keeps a 'buy' rating and a 400p valuation, well above this morning’s 238.5p print (down 3%).