By Anna Wise

Copyright standard

Online fashion retailer Asos has warned investors that its yearly sales and earnings will be lower than expected as consumers continue to ease back on spending.

Shares in the company dropped by about a 10th on Tuesday morning following the update.

However, it said it was making good progress on its major turnaround including by slashing excess stock and reducing business costs.

Asos said its total sales for the 2025 financial year are expected to be slightly below what analysts were estimating, as it continues to “focus on higher quality sales against a soft consumer backdrop”.

Most analysts were forecasting group revenues to decline by 8.4% year on year.

Adjusted earnings before interest, tax and other costs are set to have leapt by more than 60% year on year.

But it cautioned this would bring it to the “lower end” of its forecast range of between £130 million and £150 million.

Asos has been making significant changes to how the business is run in a bid to make it more profitable and cut down its cost base.

This has included reducing the total value of its inventory by more than 60% since the end of the 2022 financial year after accumulating a build-up of stock.

It has also made savings through efforts to reduce customers making “unnecessary” returns and shutting its US warehouse in Georgia.

Asos said it is in the “final phase” of its transformation, meaning it is beginning to launch new offers and features for its customers.

This has included an exclusive collaboration with Adidas, expanding its Topshop and Topman collection, and rolling out a new loyalty programme in the UK.

Asos said it was seeing “positive early signs” of these efforts on customer engagement with the retailer.