Asos has said it will take “necessary actions” to transform its fortunes after the fast fashion retailer’s first-half losses widened and sales fell by nearly a fifth.

The company reported an 18% drop in sales year on year for the first six months to 3 March. This contributed to an underlying pre-tax loss of £120m, widened from the £87.4m loss recorded during the same period a year earlier.

Asos, which benefited as physical shops were shut during Covid lockdowns, has been hit by more challenging trading conditions post-pandemic as consumers shift away from buying goods exclusively online.

It also faces stiff competition from rivals such as the Shein and retailers with a combination of stores and online retail, such as H&M and Zara.

The continued losses come as the business attempts to put in place a turnaround plan, which has focused on reducing volumes of new stock.

It said it had cut its intake of new stock by 30% compared with last year in a move to “facilitate the right sizing of stock”, while selling off a significant volume of old stock that had accumulated during the pandemic at a discount.

Asos said the higher proportion of sales of old stock and the “sub-optimal newness” of what was on offer provided a less compelling proposition to customers, creating a drag on sales.

The company told investors that this was “the medicine it needed to take” and it felt confident it had the “right level of newness to excite customers” in the next six months of trading. More than 60% of sales of products now excluded markdowns or promotions.

The firm’s new strategy includes a model that fast-tracks new designs to retail them online within three weeks, called “Test and React”.

The approach echoes rivals such as Shein, which push for increasingly quicker development of products from concept to garment, with the Chinese e-commerce company able to turn around some products in as little as 10 days.

José Antonio Ramos Calamonte, the chief executive of Asos, said: “At the beginning of this year we explained that 2023-24 would be a year of continued transformation for Asos as we take the necessary actions to deliver a more profitable and cash-generative business.”

He said the company was now becoming “faster and more agile” and was laying the foundation for sustainable profitable growth.

Separately, Asos said it would be bringing in the former Sainsbury’s and Amazon executive Dave Murray as its new chief financial officer at the end of the month.