21st Mar 2025 08:47
(Alliance News) - Asos PLC on Friday said it expects first-half adjusted earnings to be ahead of market expectations reflecting improved margins as it sells more products at full price.
In response, shares leapt 20% to 304.96 pence each in London on Friday morning.
The London-based online-only fashion retailer said it expects to see a significant improvement in profitability in the first half of financial 2025, despite falling volumes.
This reflects strong gross margin driven by lower markdown activity and increased full-price mix, and continued cost discipline, Asos said.
As a result, Asos expects revenue growth in line with the 13% constant currency consensus, and adjusted earnings before interest, tax, depreciation and amortisation ahead of the GBP34 million consensus. Asos said the consensus for adjusted Ebitda margin is 2.6%.
In the 26 weeks to March 3, 2024, Asos reported adjusted group revenue of GBP1.50 billion and an adjusted Ebitda loss of GBP16.3 million.
Asos said "encouragingly" own brand full-price sales returned to growth in the first half.
This was enabled by its Test & React model, now more than 15% of own-brand sales and growing.
Shore Capital analyst Katie Cousins upgraded Asos to 'buy' from 'hold'.
"Whilst we continue to state some caution relating to market pressures and customer trends, the recent balance sheet actions and progress the group has made to support profits are encouraging," she said in a research note.
She pointed out that the share price falling to 2008 lows, makes for a "better entry price" and factors in the market risks.
Asos will report first-half results on April 24.
By Jeremy Cutler, Alliance News reporter
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