24 April 2025

ASOS Plc

Global Online Fashion Destination

Interim results for the 26 weeks to 2 March 2025

New commercial model driving profitability transformation

Summary financial results  

Strategic update and results summary

·   Delivering profitability transformation, building on foundations laid over last two years. Positive adjusted EBITDA up c.£60m year-on-year ('YoY') in H1, driven by new commercial model and sustained cost discipline. Variable contribution increased c.30% YoY, supported by higher gross margin and better order economics. Total fixed costs held broadly flat in absolute terms, demonstrating strong cost control, effectively offsetting inflation.

·    Customers responding well to increased newness and speed to market. Gross margin up c.500bps YoY in H1, driven by lower markdown activity and higher full-price mix, demonstrating strength of new commercial model offering. In UK, our largest market, ASOS Design total sales +9% YoY in H1, growing market share⁵, enabled by market-leading Test & React ('T&R') and investments into quality. Globally own brand full-price sales returned to YoY growth in H1.

·   Sales trajectory developing as expected. In line with guidance, H1 revenues declined -13%, a continuation of FY24 trends, driven by annualising declines in old inventory (stock c.30% YoY), and optimised performance marketing.

·    Significant progress on key strategic initiatives. Successfully scaled T&R to >15% of own-brand sales, on track for 20% FY target. Flexible Fulfilment ('FF') models now at c.7% of third-party GMV⁶, with major new market and partner launches set for H2. Added exciting new brands including Bimba y Lola, Jimmy Fairly and Oh Polly, with more than 25 new brand partners in H1, and a further 40 set to launch in H2, as well as more exclusive collections.

·   Exciting pipeline of innovation ahead. Embedded new organisational structure in H1, designed to accelerate decision-making and empower culture of continuous innovation. In H2, initiatives include launching Topshop.com, ASOS.WORLD loyalty program, live shopping features, enhanced search and personalisation, as well as further leveraging AI across the business, including through our AI stylist and addressing causes of unnecessary returns.

·   US proposition improvement. US customers now accessing greater product range via UK fulfilment, following changes to our global distribution model. Early response has been strong, with double-digit run-rate sales improvement and significantly higher full-price mix. From H2, full hybrid US model in will be in operation, including a smaller, more flexible local site and Partner Fulfils roll-out. Largely non-cash c.£180m adjusting item recorded in H1 related to the Atlanta site closure. Continue to expect c.£10-20m annual EBITDA benefit from FY26. We continue to closely monitor the evolving US tariff outlook and see opportunity to respond as necessary through improved agility and flexibility of our sourcing and distribution model.

·    Free cash outflow driven by a return to normal seasonality of intake, with an H1 net working capital ('NWC') outflow. Stock health continues to improve, with inventory cover down c.15%, and sell-through up YoY. Continue to expect a significant free cash inflow in H2, driven by higher profitability and NWC inflow, to deliver broadly neutral FCF in FY25. We are confident in delivering meaningful FCF generation in FY26.

·   Net debt reduction. Balance sheet significantly strengthened through a comprehensive refinancing and proceeds from the formation of the Topshop and Topman joint venture ('TSTM JV')⁷ in Q1 FY25.

·    Re-iterating FY25 profitability guidance. Driven by a significant increase in our full-price sales mix, we continue to expect gross margin of at least 46% and adjusted EBITDA to increase by at least 60% to £130m to £150m. For FY25, we expect revenue growth towards the bottom end of consensus range⁸. FY25 GMV growth expected to be 1-2ppts better than revenue growth given scaling FF models.

José Antonio Ramos Calamonte, Chief Executive Officer said:

"H1 FY25 is the strongest sign yet that our new commercial model is working. We are driving a significant transformation in profitability, with positive adjusted EBITDA up by c.£60m YoY. Customers are responding positively to our focus on full-price sales, speed to market, and quality, resulting in a +9% YoY increase in ASOS Design sales in the UK, and positive momentum with our partner brands. Importantly, these successes have been achieved whilst maintaining strong cost control and improving our inventory health. We look forward to a fantastic pipeline of new products, brands and customer experiences, and remain confident in our ability to deliver sustainable, profitable growth."

CEO Review

Our ambition is to become the number one destination for fashion-loving 20-somethings. We know we have a unique platform to bring customers the best combination of exciting own-brand and partner brand products, delivered in an inspiring and convenient way, through engaging styling and curated outfits. We want to deliver this differentiated customer proposition through a profitable, flexible and resilient business model. These two elements work in tandem - greater efficiency enables better customer experiences, which generates superior returns.

Over the last two years, we had a clear focus on the groundwork required to deliver this - completely restructuring our inventory position and the way we buy fashion through embedding our new commercial model, comprehensively refinancing our balance sheet and reducing our net debt, and fundamentally transforming our profitability through a relentless focus on operational efficiency. With these solid foundations successfully in place, our focus is on continuing to refine and build upon both these areas - delighting our customers through building the most inspirational platform, supported by a solid, profitable and resilient business model.

As we have said before, we will grow our business in a sustainable, profitable way - not by re-engaging with excessive promotion and performance marketing, but through an innovative product and experience-led strategy that generates lasting relationships with our core customers, in our core markets. In H1 FY25, we can see the early signs of our new growth engine working. In the UK, our largest market, ASOS Design overall sales were up +9% YoY, growing share over that period in a competitive market. Globally, our own brands, where we can see the most immediate results of our new commercial model given faster lead times, returned to full-price sales growth. This is a prime example of our product-led strategy in action: combining our market-leading Test & React model to ensure we're first for fashion with the right trends at the right time, with our investments into product quality, delivering profitable sales growth through full-price sales, lower markdowns, and lower returns. Across our partner brands, we've seen strong results where we've deepened our collaboration, such as with adidas where we launched a number of exclusive collections, and Mango, where we recently added Mango Man. Customers have also been enjoying our enhanced premium assortment with elevated content and styling, alongside our curated product selection that now includes ARKET, Bimba Y Lola and Pattern.

Our focus is on bringing our customers more of these great experiences. Building on the strong momentum in our product strategy, we'll continue to scale Test & React to 20% of own-brand sales by the end of the year and towards our medium term target of 30%. Our newly formed Brand Acquisition and Development team is generating great momentum with our brand partners, including welcoming more than 25 exciting new brands onto our platform in H1, with a further 40 launching in the next six months. We're building deeper relationships with our partners, with more exclusive collaborations on the way, and further scaling our flexible fulfilment models. We've recently launched our new loyalty program, ASOS.WORLD, which will be further rolled out to give our most engaged customers more exclusive fashion-forward benefits. We're bringing the best of Topshop and Topman to customers through more channels, online and offline, including the launch of Topshop.com in H2. We'll continue to leverage AI to give customers more personalised experiences, through our AI Stylist tool, better size and fit advice and improved search and recommendations, as well as launching a new live shopping feature. Our goal is to build a business that delights customers so much that they give us more of their time, love and fashion spend.

We can see early signs of our re-invigorated offering resonating with customer, but we know we must go further, shout louder, and bring the best of ASOS to more future core customers. We are energised by the progress we have made so far and excited for the next phase of our journey.

I want to take this opportunity to thank our ASOSers for their extraordinary work and passion, and our valued customers for trusting us to be part of their fashion journey.

I'd like to describe in a bit more detail what we've achieved over the last 6 months, as well as what's next for ASOS.

Speed, flexibility and quality are driving improved full-price sales and faster sell-through

Great product is at the heart of our flywheel, and our new commercial model is focused on delivering customers the right product at the right time. We entered this year with our inventory in the strongest position it has been for many years, with stock levels now down c.60% since FY22, and c.80% of our fashion stockholding less than six months old. We know that delighting customers with the hottest and freshest products and brands, at the right price, delivered in a reliable and consistent way, leads to great customer experiences and inspires loyalty. We can drive better unit economics from selling full-price products, and generate a better return on marketing investment when directing people to the most relevant product. The more efficient we get, the better the experience we are able to deliver.

Own-brands returning to growth, driven by speed to market and improved quality

Our own-brands are a core engine of our customer proposition and where we can see the most immediate results of changes to our new commercial model, given the faster lead-times and speed-to-market. In the UK, our largest market, ASOS Design overall sales increased +9% YoY in H1, growing market share over that period. Globally, our own-brand full-price sales returned to YoY growth. Our market-leading Test & React model, now more than 15% of own-brand sales and growing, has been a key enabler within this, ensuring our own brands always offer the most exciting product and set the trends for our fashion-loving customers. Our customers have benefitted from investments we've made into improving the quality of our own-brand product. In categories where our efforts in scaling Test & React and quality improvements are most progressed, such as ASOS Design knitwear, we've seen double digit YoY growth rates, with lower markdown, and lower returns rates. Our design teams have begun using AI design tools to increase sampling accuracy and improve the speed of decision making, improving the agility of our own-brand operations. We see significant long-term potential for AI to enhance how our teams work, allowing them to focus on more strategic activities.

Strong partner brand momentum, with more exclusive collaborations on the way

We've also seen great momentum with our partner brands. While the results of this take relatively longer to appear in our financials, the leading indicators are clear. Our newly formed Brand Acquisition and Development team is focused on identifying the best top tier, emerging and local-hero brands, to connect with our customers through our unique platform, and unlock new opportunities for them. We've added more than 25 exciting new brands in the last six months, including East London cult classic House of Sunny, being the first European wholesale partner for trend-setting Australian favourite Princess Polly, as well as welcoming premium brands such as ARKET and Bimba Y Lola. We've got even more excitement to come, with a further 40 new partner brands launching in H2, including inclusive denim favourite Good American, Pharell William's Ice Cream label, and beauty icon Pat McGrath Labs. We've continued to scale our flexible fulfilment models Partner Fulfils ('PF') and ASOS Fulfilment Services ('AFS') to c.7% of third-party GMV across 120 brands, up c.30% since H2 FY24. These models allow us to be more agile in how we collaborate with our partner brands, while offering our customers increased breadth (i.e. expanding the product range available on the ASOS platform) and depth (i.e. giving customers access to bestsellers when our wholesale stock is depleted). In H2 FY25, we are excited to launch further new markets and brands, including launching PF in the US, and launching AFS with a major brand partner.

We can see the unique power of our platform when we combine our own-brands and partner brands in exciting and inspirational ways, through deeper relationships, creating incredible customer engagement. Our in-house design teams and studios can elevate brands through exclusive styling and creating outfits around products, which our marketing teams and ASOS Media Group ('AMG') can amplify to maximise brand impact. In H1 FY25, some of our biggest successes involved these exclusive collaborations. In partnership with adidas, we styled an exclusive drop of two of adidas' most iconic trainers in the print of the season - cow print - with an exclusive ASOS Design collection of ten bold, trend-driven pieces, created through our Test & React model. The launch generated a 70% uplift in traffic and our capsule collection achieved a 90% full-price sell-through in less than two weeks. The goal in H2 and beyond is to keep generating these exclusive, differentiated moments for customers to re-establish ASOS as the go-to fashion destination.

Backed up by more efficient capital allocation: healthier inventory, healthier operations

New commercial model delivering transformational profitability benefits

We can already see the transformational effect our new commercial model has had on our profitability. In H1, our adjusted gross margin increased by c.500bps YoY, driven by lower markdown activity and increased full-price mix, supporting stronger basket economics. At a group level, we continue to annualise changes to our commercial model which affect our YoY revenue growth rate in H1; most notably c.30% declines in inventory with fashion stock less than six months old now c.80% of our mix, and rebalancing our customer proposition and marketing strategy, particularly in international markets. In absolute terms, our adjusted gross profit was down just 3% YoY, despite the volume deleverage, and our variable contribution increased c.30% YoY, demonstrating the focus on higher quality sales.

Underpinning all this is our continued focus on efficient capital allocation. Our new commercial model is based on disciplined inventory management. With significantly improved speed to market (the lead time between buying and selling stock) across our buying process, we can make intake decisions with increased flexibility, driving higher full-price sales. Coupled with effective in-season clearance, this allows us to generate a better return on cash invested into inventory. Our flexible fulfilment models further enable us to maximise the availability of the most exciting product with minimal inventory risk. In the last two years, we've improved our inventory cover by more than 35% through faster sell-through despite lower markdowns. This results in higher sales and gross profit for a given level of inventory, thereby enhancing our cash flow. This has enabled us to further reduce our inventory levels to £412m at H1, and will enable us to increase our sales with a more efficient investment in inventory in the future.

Focus on efficiency throughout our operations

Our focus on efficiency extends across our entire operations. By removing waste, both in terms of time and costs, we can unlock opportunities to invest in our strengths, and into areas of our competitive advantage that our customers really value. In H1 FY25, we demonstrated this by growing our variable contribution by c.30% YoY, while holding our fixed cost base broadly flat YoY in absolute terms, offsetting inflationary pressures. This has been driven by a wide range of initiatives, particularly within our supply chain and our customer returns.

In H1, we reduced our distribution and warehousing costs by a further c.20% YoY. Through the consolidation of our warehouse network, and increased use of automation, we've reduced the pick and pack cost per unit by more than 10% YoY, and by c.20% over the last two years. We see further opportunity to minimise the causes of unnecessary returns, having successfully reduced our underlying returns rate by c.150bps in H1. We've made a series of changes that are designed to eliminate needless pain points for customers in the returns experience, through improving our size and fit, better on-site product display, and using AI to better understand and address the reasons for returns. In 2024, we introduced a minimum net order threshold for free returns for customers with exceptionally high returns rates in our core markets, which has had a positive impact on our returns rates. We plan to roll the minimum net order threshold out to further geographies this year, while continuing to offer free returns to all our customers in our core markets. 

We announced further efficiencies to our global distribution network earlier this year, which significantly improve the availability of our best fashion product for our US customers, while continuing to offer competitive delivery speeds. Since moving distribution to the UK during H2, we have seen a positive response from customers. Driven by an enhanced product assortment, we've seen a double-digit improvement in our sales run-rate with significantly higher full-price sales mix. Going forward, our US customers will be served through a hybrid model, combining our automated UK fulfilment centre, a smaller, more flexible local US site, and direct from partners through Partner Fulfils. We continue to expect a c.£10-20m positive EBITDA benefit annually from FY26 (with a broadly neutral impact on FY25 adjusted EBITDA and FCF), driven by lower total fulfilment costs, including expected changes to US de minimis thresholds. As the US tariff outlook evolves we continue to monitor this closely and see opportunity to respond to this as necessary through the improved agility and flexibility of our sourcing and distribution model. In H1, we recorded a predominantly non-cash c.£180m adjusting item, relating to the mothballing of our Atlanta site, which will be formally marketed later this year once vacated. We see further potential benefits to our inventory management and working capital over time, as customers get better availability of more consolidated stock in our Barnsley and Berlin fulfilment sites. These are just some of the changes we've made to fuel our competitive advantages.

Innovating faster than ever to deliver great customer experiences

The ultimate proof of success for ASOS will be to return to sustainable profitable revenue growth, through growing our customer base. We've spoken about the headwinds and challenges we faced during our transformation, which impacted our customer experience over the last two years as we exited certain unprofitable activities to invest into areas that matter most to our core customers. With the foundations for our new growth engine now in place, our efforts are increasingly focused on strengthening our relationship with customers, bringing more engagement and excitement to ultimately grow our share of wallet and our penetration of our core demographic. The way we will do this is through innovating faster than ever before, across both our product and our customer experience.

Organising our business to deliver better customer outcomes

We made a number of changes in H1 to better align our organisation with our strategy and customer-focused approach to driving growth, through accelerated innovation and decision-making. At the beginning of the year, we transformed our Technology and Digital Product models, reorganising into smaller, autonomous units aligned to customer focus areas. We are adding 100 software engineers, increasing our capacity by 25% to empower faster innovation of our on-site customer experience while simplifying our structure. In February 2025, we welcomed Przemek Czarnecki who joined as EVP Technology and brings 30 years of experience in digital engineering and engineering management. We also announced the strengthening of our Commercial and Customer functions into a single team responsible for delivering an exciting customer journey on-site and off-site. This integrated function will further build on the great work of both teams by accelerating decision making and increasing effectiveness, including through a new geography-based structure designed to empower the customer and enable more tailored strategies that excite at a local level.

Much more product and experience-led innovation to come

We've made significant strategic improvements to our product offering already, but we see opportunity to drive this even further. We will continue to scale Test & React to 20% of own-brand sales in FY25, towards our medium-term target of 30%. We have another 40 exciting new partner brands joining us in H2, including inclusive denim favourite Good American and Pharell William's iconic Ice Cream label. We'll continue to grow our flexible fulfilment models, through launching Partner Fulfils with new brands and in new geographies, including the US, and launching ASOS Fulfilment Services with a major brand partner. 

We can see early signs of our re-invigorated product offering resonating with customers, however, we know we must go further, shout louder, and bring the best of ASOS to more future core customers. We have continued to rebalance our marketing investment towards brand and influencer marketing, lowering our performance marketing by c.30% in H1. In order to build lasting, engaged relationships with our core customers we need to deliver consistent and engaging brand messaging both on-and-offsite. We can see the impact when we connect with our customers in an authentic and personalised way, which is a key focus throughout our customer journey.

We want our customers to feel rewarded and connected to ASOS by bringing them more reasons to discover, browse and shop with us. In March, we launched the first phase of our new loyalty program, ASOS.WORLD, which gives customers exclusive, fashion-first benefits, from early access to the hottest products, to invites to exclusive events, priority back-in-stock notifications, and more. The initial roll-out is targeted to a small group of customers in the UK, with plans to scale the program out further in H2. The program will be free to join, with a tiered approach, ensuring customers receive personalised rewards and experiences reflecting their loyalty and engagement with ASOS. Our newly enhanced AI Stylist tool has been a key highlight for our early ASOS.WORLD customers, driving a c.60% increase in saved items.

We are transforming our search and recommendation experience with AI-driven technologies to enhance relevance, personalisation and usability. As well as our AI Stylist fashion advisor, we have developed an AI-based outfit generator which understands clothing compatibility and can be used to create original outfits from individual products, leveraging looks manually curated by our stylists to create more personalised styling inspiration. In H2, we will be piloting this, as well as a live shopping feature and enhanced video content to generate further engagement with our customers.

Topshop and Topman ('TSTM') are two brands with incredible heritage and from listening to customers, we know that the right place for TSTM to shine is both online and offline. To do this, we have launched a dedicated cross-functional team, supported by ASOS' infrastructure, to ensure TSTM can thrive as standalone brands, on and off the ASOS.com platform. In H1, we've been rebuilding engagement with our customers, and ramping up our brand activity including events and experiences. Through a select range of wholesale partners and the launch of Topshop.com by the end of FY25, we're excited to bring the best of TSTM to customers through new avenues.

Outlook and guidance

In FY25, the benefits of our new commercial model will become increasingly apparent. As such, we continue to expect FY25 gross margin improvement of at least 300 bps to more than 46%, and adjusted EBITDA growth of at least 60% to £130m to £150m, post TSTM JV impact⁹. We expect FY25 free cash flow to be broadly neutral, with capex of c.£130m¹⁰ and cash interest of c.£35m. We will continue to focus on creating a solid and profitable base upon which we will drive sustainably profitable revenue growth. For FY25, we expect revenue growth towards the bottom end of consensus range. FY25 GMV growth expected to be 1-2ppts better than revenue growth as a result of our FF models scaling.

We have made substantial progress on our operational cost structure and as such we feel confident that for FY26 we will generate meaningful free cash flow.

Our core focus remains sustainable, profitable growth. In the mid-term we continue to expect to generate adjusted EBITDA sustainably ahead of capex, interest, tax and leases, with revenue growth and an adjusted EBITDA margin of c.8%. Our new commercial model can drive materially higher gross margin towards c.50% through higher full-price sales mix and flexible stock models, which also benefit our inventory days. Our focus on efficient capital allocation will bring our capex down to 3% to 4% of sales, over time, we anticipate that our improving profitability and cash flow will also reduce our net debt and interest levels.   

Notes

1.   Numbers throughout this section are subject to rounding.

2.   Like-for-like ('LFL') adjusted revenue are adjusted for the impact of foreign exchange translation (constant currency sales).

3.   The alternative performance measures used by ASOS are explained, defined and reconciled to statutory measures in the Alternative Performance Measures note at the end of the Financial Statements.

4.   Adjusted cost to serve defined as operating costs (excluding depreciation, amortisation, impairments and adjusting items) as a percentage of adjusted revenue.

5.   Kantar Fashion Clothing, Footwear & Accessories 24 weeks ended 2nd March 2025

6.   Gross Merchandise Volume ('GMV'): Adjusted retail sales plus revenue attributable to flexible fulfilment partners, net of returns and excluding sales tax.

7.   The arrangement with Heartland, whilst referred to as a joint venture throughout this report, will be accounted for as an associate, as detailed in note 12 of the Financial Statements

8.   Company-compiled consensus range for FY25 revenue growth of -9% to -2%, as of 31 March 2025.

9.   As guided in September 2024, the TSTM JV is expected to have a £10-20m negative impact on EBITDA in FY25, and to be increasingly EBITDA accretive over time.

10. To remain comparable with previous guidance, expenditure relating to the automation of Atlanta has been included in this figure, but will be reported as a non-underlying operating cost in FY25 results.