Ecommerce giant Asos, which has been facing difficulties, has reported a decrease in losses as its recovery plan begins to show results.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) have moved into the black at £42.5m for the 26 weeks leading up to March 2, compared to a loss of £16.3m last year, as reported by .
The company's shares fell by nearly two per cent in early trading. Asos' operating loss improved from £246.8m to £210.1m, while net debt was reduced from £348.8m to £275.8m.
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The firm has been grappling with a general downturn in e-commerce following the pandemic, which also affected boohoo and Pretty Little Thing, but initiated a significant recovery programme in 2023.
"[These results are] the strongest sign yet that our new commercial model is working," said CEO José Antonio Ramos Calamonte.
"We are driving a significant transformation in profitability... Customers are responding positively to our focus on full-price sales, speed to market, and quality."
"We look forward to a fantastic pipeline of new products, brands and customer experiences, and remain confident in our ability to deliver sustainable, profitable growth," Calamonte added.
The company anticipates an improvement in gross margin of at least three per cent to over 46 per cent for the full year, alongside adjusted EBITDA growth of at least 60 per cent, from £130m to £150m.
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Robinhood 海角视频's lead analyst, Dan Lane, commented: "Total sales are as expected, adjusted earnings have flown past market expectations and gross margins are getting back to where they should be."
"A missing puzzle piece is free cash flow but, if Asos can start generating cash there might still be life in one of the index's most disappointing stories over the past few years," he added.
Asos' share price has plummeted by more than 94 per cent since its pandemic high in April 2021.
"The danger is Asos continues to lose relevance, even with a move offline for the Topshop and Topman brands. That looks to be the right move as customers increasingly want real-world experiences again," Lane added.
"Making a turnaround even harder is the fact that ASOS is going to have to appeal to consumers already dealing with Awful April and inflation-struck budgets, a considerable hurdle."
Julie Palmer, Partner at Begbies Traynor, remarked: "Sadly, ASOS continues to face an uphill battle to regain its footing in the competitive online retail market."
"With revenue growth remaining elusive, the share price sitting far below its pandemic heights and now the looming threat of tariffs, investors have little to be hopeful about."
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"While most of its peers will also be knocked by the tariffs, ASOS faces a particularly arduous journey to re-establish itself as the favoured marketplace for younger online shoppers, many of whom have switched to cheaper or more sustainable options.
"Consumer confidence looks set to remain subdued for some time to come, so ASOS must find a way to adapt to shifting consumer behaviours, volatile global trade policies and carve out a distinctive position to grow its share of the ever changing online retail market."