Interim results for the 26 weeks to 3 March 2024
17 April 2024
Strong progress on speed and profit initiatives under Back to Fashion strategy
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Summary financial results
£m | 26 weeks to 3Mar 2024 (HY24) | Six months to 28 Feb 2023 (HY23) | Change | Adjusted LfL CCY change |
Headline measures1 | ||||
Adjusted group revenue2,3 | 1,497.5 | 1,838.5 | (18%) | |
Adjusted gross margin | 40.3% | 42.9% | (260bps) | |
Cost to serve4 | 41.5% | 42.7% | (120bps) | |
Adjusted EBITDA | (16.3) | 4.6 | (20.9) | |
Adjusted EBIT | (98.1) | (69.4) | (28.7) | |
Adjusted loss before tax | (120.0) | (87.4) | (32.6) | |
Net debt | (348.8) | (431.7) | +82.9 | |
Free cash outflow | (21.1) | (258.8) | +237.7 | |
Statutory measures | ||||
Group revenue | 1,505.8 | 1,840.6 | (18%) | |
Gross margin | 40.0% | 36.1% | +390bps | |
Operating loss | (246.8) | (272.5) | +25.7 | |
Loss before tax | (270.0) | (290.9) | +20.9 |
Strategic update and results summary
- Strong progress on Back to Fashion strategic priorities to make ASOS faster, more agile, and more profitable:
- Delivered c.£240m year-on-year (‘YoY’) improvement in H1 free cash flow (outflow of c.£21m) through disciplined inventory and cost management, representing our strongest H1 cash performance since 2017.
- Ahead of plan on stock reduction with £593m stock at H1 (vs. FY24 objective of c.£600m). Approximately half of the stock reduction came from the clearance of stock over 12 months old.
- Sold through c.83% of AW23 stock in H1, representing a 17ppt YoY improvement and resulting in two-thirds reduction in volume of AW stock carried forward vs. prior year.
- Increased stock turn on newness by more than 40% YoY with a c.10ppt YoY improvement in 12-week sell through - indicative of better and more relevant product under the new model.
- Flexible models scaling well: Test & React running at c.5% own-brand sales and already above 30% in launch category (ASOS Design Jersey Tops); Partner Fulfils running at c.5% of partner brand GMV.
- Structurally improved profitability with cost to serve4 down 120bps to 41.5% of sales despite volume deleverage over fixed costs and UK brand marketing investment.
- As previously announced, H1 FY24 sales -18% as we annualised actions taken during FY23 to improve core profitability under the Driving Change agenda and with H1 intake c.-30% YoY as we right-size stock levels.
- Over 60% of sales from product now excluded from promotions. However, adjusted gross margin down 260bps YoY due to planned discounting to clear old stock. Further clearance activity planned in H2 to unlock the full benefit of the new commercial model from FY25. Gross margin drag in H1 from heightened mix of old product sales estimated over 5ppt. Consequently, adjusted EBITDA (‘AEBITDA’) loss of £16.3m in the half.
- Reiterating guidance for FY24 sales decline of 5 to 15%, positive adjusted EBITDA and cash generation. Further clearance activity planned in H2 to unlock the full benefit of the new commercial model from FY25.
- AEBITDA for FY25 expected to be significantly higher than FY23 and FY24 driven by: (1) materially higher gross margin following removal of old stock and higher full-price sales mix of flexible stock models; and (2) ongoing transformation of the business following cost action already taken in FY23 and H1 FY24.
- Further strengthening of company leadership including appointment of new CFO detailed in separate RNS.
José Antonio Ramos Calamonte, Chief Executive Officer said:
“At the beginning of this year we explained that FY24 would be a year of continued transformation for ASOS as we take the necessary actions to deliver a more profitable and cash generative business. Under our Back to Fashion strategy, we set out three priorities for the year – to offer the best and most relevant product, to strengthen our relationship with customers and to reduce our cost to serve. We have delivered on each of these in the first half of the year, including right-sizing our stock ahead of target to drive our best first half cash performance since 2017 and seeing excellent results in our Test & React model, which is growing at pace. ASOS is becoming a faster and more agile business, and we are reiterating our guidance for the full year as we lay the foundations for sustainably profitable growth in FY25 and beyond.”
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Notes
1 The alternative performance measures used by ASOS are explained, defined and reconciled to statutory measures on pages 41-44.
2 Adjusted revenue includes retail sales, wholesale and income from other services, excluding jobber income.
3 Like-for-like (‘LfL’) sales are adjusted to remove the benefit of one additional day of trading in H1 FY24 (4 September 2023 to 3 March 2024) vs. H1 FY23 (1 September 2022 to 28 February 2023). The impact of the additional day is less than 1%.
4 Cost to serve defined as operating expenses (excluding depreciation and amortisation and excluding adjusting items) as a percentage of adjusted revenue.
Investor and analyst meeting:
The group will be hosting an in-person presentation for analysts at 9.30am at ASOS HQ, Greater London House, NW1 7FB. A live webcast will also be available, and a recording of the presentation will be uploaded to the ASOS investor relations website afterwards.
To access live please dial +44 208 080 6591 and use Meeting ID: 835 5126 0264 and passcode: 677000. A live stream of the event will be available here.
A recording of this webcast will be available on the ASOS Plc investor centre website after the event: https://www.asosplc.com/investor-relations/
For further information: Investors: | |
Holly Cassell, ASOS Head of Investor Relations | Tel: 020 7756 1000 |
Media: | |
Jonathan Sibun / Will Palfreyman, Teneo | Tel: 020 7353 4200 |
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