Asos will take "necessary actions" to deliver a more profitable business, after it saw its sales drop by 18% in the first half of the current financial year.

The online fashion retailer saw its revenue drop from £1.8bn in the six months to the end of February 2023 to £1.5bn in the 26 weeks to 3 March 2024.

This contributed to an underlying pre-tax loss of £120m, an increase of a £87.4m loss that was recorded a year previously.

In this period, Asos was able to sell 83% of its autumn/winter (AW) stock, representing a 17 percentage point improvement on 2023, with a two thirds reduction in AW stock carried forward.

Chief executive officer at Asos, José Antonio Ramos Calamonte, said: "At the beginning of this year we explained that FY24 would be a year of continued transformation for Asos as we take the necessary actions to deliver a more profitable and cash generative business. Under our back to fashion strategy, we set out three priorities for the year - to offer the best and most relevant product, to strengthen our relationship with customers and to reduce our cost to serve.

“We have delivered on each of these in the first half of the year, including right-sizing our stock ahead of target to drive our best first half cash performance since 2017 and seeing excellent results in our Test & React model, which is growing at pace. Asos is becoming a faster and more agile business, and we are reiterating our guidance for the full year as we lay the foundations for sustainably profitable growth in FY25 and beyond.”

In the retailer’s outlook for the current financial year, it delivered its strongest H1 cash generation since H1 of the 2017 financial year.

Its guidance for the current financial year remained unchanged and Asos said it is "committed to accelerating towards an 8% EBITDA margin in the mid-term".

In line with FY24 expectations, it predicts a sales decline of between 5-15%, with a return to growth expected in the final quarter of the financial year.

Investment director at AJ Bell, added: "The first-half results remain ugly, with little improvement in the headline figures and not much more vigour in the underlying ones, once the £140m cost of mothballing the Lichfield warehouse is taken out of the equation.

"Even Asos’ preferred profit measure of adjusted EBITDA got marginally worse, as the firm recorded a £16.4m loss on the basis of this measure, against a £4.6m profit in the first six months of the previous fiscal year."

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