Asos plunged to a near-£300m full-year loss and will not return to profit until 2025.
The retailer said it expected sales to decline between 5% to 15% in its current year as it continues to clear old stock.
However, by its 2025 financial year, it expects to return to growth and predicts that EBITDA margin will be around pre-Covid levels.
The online fashion retailer made a pre-tax loss of £296.7m in its year to 3 September, widening sharply from last year’s £31.9m loss. On an adjusted basis, it plunged to a £70.3m loss, compared to a profit of £22m the year before.
Despite the eye-watering losses, Asos flagged that its second half performance had improved, with adjusted EBIT up more than 100% year-on-year.
Sales for the year fell 11% to £3.54bn, however free cashflow was up more than £125m, which it said reflected “material improvements to core profitability and strong inventory management”.
The online giant has focused on reducing stock levels, which were down around 30% over the year, and boosting profit per order by more than 30% as it seeks to rebuild its balance sheet.
It said it had cleared 84% of the £1.1bn of stock carried forward in the year, however the “final cleansing of stock” will remain a drag on both sales and profitability in its current year.
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Asos said it will “prioritise a shift Back to Fashion”, as it plans to offer “the best and most relevant product, styled the ASOS way, with an exciting and seamless customer experience geared around fashion and excitement”.
It plans to spend £30m in marketing as it vowed to maintain its “obsession” with both operational excellence and disciplined capital allocation.
The online fashion giant is also working to improve the speed to market of its products and has produced around 500 options with lead times of around two weeks as part of its Test & React pilot, which will be scaled to over 10% of own brand products this financial year.
CEO José Antonio Ramos Calamonte said the past year was a “year of good progress for ASOS in a very challenging environment”.
“We have reduced our stock balance by c.30%, significantly improved the core profitability of the business, strengthened our balance sheet, and refreshed our leadership team.
“Encouragingly, stock that was brought in under our new commercial model over the summer months has performed strongly and this gives us the confidence to accelerate the rollout of our new processes.
“As such, we are taking decisive action in FY24 to clear stock brought in under our old model while substantially improving our speed to market and investing in our brand, reminding our customers what we’re really about: fashion.”
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