ASOS’s results are closely watched at present and like most underperforming stock exchange-listed businesses, it’s because we’re waiting to see just how bad its latest sales actually were.

We found out on Tuesday with the company reporting sales for the 26 weeks to 3 March down by a hefty 18%. It didn’t put a monetary figure on the numbers.

But that big drop was “broadly in line with guidance” as it had said the trend seen in the final period of FY23 would continue in the first half of FY24 as the firm annualised actions taken during FY23 to improve core profitability under its Driving Change agenda. H1 stock intake was also down around 30% year on year as it right-sized stock levels.

And it said it made “good progress on implementing the Back to Fashion strategy, including action to clear aged stock and transition to the new operating model by FY25”.

In fact, it’s ahead on its plan to improve stock efficiency and reduce inventory to around £600 million by year end. Its Test & React strategy is now tracking at around 5% of its own-brand sales, “bringing high-fashion product from design to site in two to three weeks, increasing our agility in responding to rapidly evolving customer demand”.

Further positives came as free cash flow improved by around £240 million year on year in H1 due to its improvements in underlying profitability and the clearance of aged stock.

And it said that despite the sales drop, H1 free cash outflow of around £20 million “represents a strong outcome in a period typically characterised by significantly negative working capital and represents our strongest H1 cash performance since FY17”.

Its full-year guidance is unchanged, including a 5%-15% sales decline, positive adjusted EBITDA, inventory back to pre-Covid levels, and positive cash generation, reducing net debt. That range of between minus 5% and minus 15% means the company must be expecting a much better second half as it will need some radically improved figures to skew the numbers back upwards after that 18% first-half drop.

So does the market think ASOS is on the right track? As mentioned, the company is stock exchange-listed so an instant reaction to its figures can be seen by the share price action early on Tuesday. The shares jumped over 5% first thing.

They’d reached a high of more than £70 each around six years ago but closed at less than £3.50 each on Monday, valuing the entire business at just £413 million — much less than the billions that the previous high had indicated it was worth. However, at 8:30 on Tuesday they changed hands for almost £3.64 each, valuing the business at nearly £435 million.

CEO José Antonio Ramos Calamonte said the firm is becoming “a faster and more agile business, aided by the incredible work of our teams to speed up all of our processes to deliver the fashion, quality and prices that our customers want, when they want it. 

“I’m excited by the performance of our new collections, while we have also made great progress in monetising inventory that built up over the pandemic and in improving the core profitability of our operations. We have reconfirmed our guidance for FY24 as we lay the foundations for a more profitable, cash generative business from FY25 and beyond”.