Asos, Britain’s one-time poster child for the shift to online fashion retailing, swung to a first-half loss, hurt by a squeeze on household budgets and elevated product returns but said it was confident of a return to profit in the second half.

The group, which announced a major restructuring last October, said on Wednesday it made an adjusted loss before tax of £87.4 million ($110.3 million) in the six months to Feb. 28, versus a profit of £14.8 million in the same period last year.

Revenue of £1.84 billion pounds was down 10 percent on a constant currency basis.

Asos and rival Boohoo grew rapidly in recent years as 20-somethings around the world snapped up their fast fashions, and demand surged again during the pandemic when high street rivals were closed.

But supply chain issues, competition from rivals like Shein and a cost-of-living crisis have weighed on their business models.

British households are currently contending with the highest inflation in western Europe, running at 10.1 percent in March.

Shares in Asos have halved over the last year, with some analysts fearing it may need to raise further equity.

Asos ended the half with cash and undrawn facilities of £408.6 million.

But for the full year it forecast a free cash outflow of around £100 million, around the bottom end of previous guidance.

Assuming no improvement to the external trading environment, it forecast a “low double-digit” decline in second-half sales, but with core earnings of £40 million to £60 million, reflecting its focus on profitable sales.

“I am very confident of our return to sustainable profit and cash generation in the second half of the year and beyond,” CEO José Antonio Ramos Calamonte said.

At the statutory level, Asos reported a first-half pretax loss of £290.9 million pounds, including £203.5 million of one-time items relating to the overhaul of its business model.

By James Davey; Edited by Sarah Young and Sharon Singleton

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