In major news on UK stocks, ASOS PLC (GB:ASC) shares rose nearly 3% as of writing, after the company announced its interim results for FY24 and stated that it expects higher profits in Fiscal 2025. The retailer also reaffirmed its current year’s outlook, citing disciplined stock management and cost controls, resulting in the highest cash generation in the company’s first-half results since FY17.
ASOS shares surged over 11% during early trading hours before retracting slightly. Year-to-date, the stock remains down by 14%.
ASOS is a prominent British online retail brand known for its diverse selection of clothing, footwear, and cosmetics, primarily catering to a youthful global audience.
ASOS’ Interim Results: Steady Progress on Track
In the first half, ASOS’ revenue declined by 18% to £1.5 billion on a statutory basis, compared to the same period last year. The company posted an adjusted EBITDA loss of £16.3 million, compared to profits of £4.6 million a year ago. The performance in the period was mainly impacted by the company’s decision to clear off previous stock through heavy discounts.
ASOS continues to face tough economic conditions and is implementing measures to accelerate new collections while focusing on optimizing stock levels. The company is ahead of its stock reduction goal of £600 million for FY24, as it ended the first half with £593 million in stock. Approximately half of the reduction in stock came from clearing inventory older than 12 months.
During the reported period, ASOS’ free cash flow increased by £240 million over the first half of FY23, mainly driven by stock clearance.
Is ASOS a Buy or Sell?
On TipRanks, ASC stock has received a Hold consensus rating based on one Buy, five Holds, and three Sell recommendations. The ASOS share price target is 375p, which is 7.7% above the current trading levels.
