ASOS LON: ASC executives said the online fashion retailer’s multi-year turnaround is showing tangible results in the first half of fiscal 2026, with profitability and gross margin improving as the company pivots from a promotion-heavy model toward a “newness” and full-price-led approach. Management also pointed to “early signs” of a return to growth, particularly in womenswear, alongside efforts to rebuild the customer base and accelerate product and technology initiatives.
Management: transformation “delivering,” with growth back on the agenda
CEO José Antonio Ramos Calamonte framed the first half as evidence the company is “delivering to our promises” after three years of restructuring. He reiterated ASOS’s ambition to be “the best global destination for young fashion lovers,” supported by three pillars: a relevant assortment, an inspirational shopping experience, and an efficient, flexible operating model.
Ramos Calamonte said earlier phases focused on resolving legacy balance sheet and stock issues and transforming the commercial model away from “a lot of stock, a lot of promotion, and a lot of performance marketing” toward a model “based on newness, excitement, full price sales.” With those foundations in place, he said the company began shifting focus toward growth at the start of the fiscal year, concentrating on two priorities: womenswear and the U.K., and rebuilding the customer base through new customer acquisition.
H1 financial picture: margin, EBITDA and efficiency gains
Finance leadership emphasized that volumes remain under pressure but profitability is improving. Aaron (presenting financial performance) said GMV and revenue were still negative but “broadly in line with expectations,” noting a roughly five-point gap between GMV and revenue that he attributed to the increasing mix of Flexible Fulfilment models.
Key improvements highlighted by management included:
- Adjusted EBITDA rose 51% to £64 million, driven by gross margin gains and cost efficiencies.
- Gross margin improved 330 basis points in the half, with leadership characterizing the improvements as “structural and sustainable.”
- Profit per order increased 30% year-over-year, supported by higher average order value and reduced return rates.
- Inventory fell 10% in H1, with management saying stock remains “tightly controlled” and health is improving.
Aaron said ASOS’s cost-to-serve performance included 200 basis points of underlying efficiency gains, though “revenue deleverage masks” that progress. He also noted the company reinvested 50 basis points into marketing, while cost-to-serve increased 90 basis points overall—half due to marketing reinvestment and half due to the structural impact of the ASOS Fulfilment Services (AFS) model.
On cash flow, Aaron said free cash flow was a £93 million outflow, which he described as consistent with seasonal working capital patterns. He said ASOS expects an H2 inflow to support its guidance for broadly neutral free cash flow for the full year.
Balance sheet steps: refinancing, convertible repayment, and liquidity
Aaron said ASOS took “two strong steps forward” on balance sheet repair in the first half. He highlighted a refinancing completed in November that reduced interest costs and extended maturities to 2030, while adding £87.5 million of liquidity through a delayed draw term loan that remained undrawn at the half-year.
After the period end, ASOS repaid £74 million of the remaining 2026 convertible bond using cash reserves. Aaron said the net debt bridge showed a £90 million increase, primarily from non-cash interest accretion on the 2028 convertible bond, and he expects absolute net debt to improve in H2 alongside the company’s free cash flow expectations.
In Q&A, Aaron also addressed a £67 million non-cash technology asset impairment. He said ASOS does not need to change its capitalization policy, explaining that the impairment was tied to an opportunity created by the company’s strategic alliance with Microsoft to migrate ERP onto Dynamics, which he said could be implemented at “relatively low, close to zero additional cost” and generate process and data visibility benefits.
Commercial progress: womenswear improvement, U.K. focus, brands and collabs
Ramos Calamonte said ASOS’s concentrated effort on womenswear and the U.K. is beginning to show in trading. He said womenswear performance in H1 was down 2% year-over-year but represented a “10-point” improvement versus the end of the prior fiscal year, adding that womenswear “is on growth” at the start of Q3.
He said the U.K. has received a larger share of marketing and initiative rollout, including out-of-home advertising, the initial launch of the loyalty program, and changes to returns such as exchanges. He reported that the U.K. performed “4 points better than the rest of the company” early in Q3 and remains ahead of the group.
On product initiatives, Ramos Calamonte highlighted Test & React growth in ASOS’s own brands, saying it grew double-digit in H1 and increased participation in own-brand sales by six points. He said lead times have been accelerated by 30 days and the relaunch of the 4505 sports line delivered 20% year-over-year growth. He also said ASOS’s autumn-winter collection improved sell-through by five points to the “highest sell-through ever” for the company.
For partner brands, he said ASOS onboarded 60 new brands in H1, bringing the renewal rate to 20% of brands over 18 months. He said Flexible Fulfilment and AFS together account for more than 20% of third-party brand sales, with more than 150 brands using partner fulfilment. Aaron added that the improved gross margin reflects reduced discounting and a higher full-price mix, alongside the “no inventory risk” economics of Flexible Fulfilment.
Ramos Calamonte pointed to the Adidas collaboration as an example of the “halo effect” of exclusive product. He said the latest drop sold out in three days, with 80% sell-through and best sellers “north of 90%” over that period, even after doubling the buy. He said overall Adidas sales on ASOS rose 43% year-over-year, the U.S. nearly doubled its participation in the collaboration’s sales, and about 50% of customers buying the collab were new customers.
Asked about exclusivity, Ramos Calamonte said he did not have the percentage of third-party assortment that is exclusive, but said ASOS has exclusive products with roughly 50 brands out of around 600. On whether Test & React will expand in menswear, he said it is already used in menswear but likely won’t be as central as in womenswear because menswear customers are “less motivated by trend,” though it can still help with color, fabrics, and shapes.
Customer, marketing and tech: loyalty expansion, app changes, and AI push
Management said stabilizing and rebuilding the customer base is a key part of the growth plan. Ramos Calamonte said churn is improving and new customer acquisition is rising: new customers grew over H1 in ASOS’s top four markets and accelerated at the start of Q3 across the group. Aaron added that customer declines since year-end were “small marginal” in the top four markets.
On marketing, management said spend increased by 50 basis points while the company reduced the cost of acquired visits. In response to questions about a “deal-hungry consumer,” Aaron said ASOS still uses promotions for a subset of profitable customers but “won’t go back to a heavy promotional model.” He also said ASOS is shifting to more top-of-funnel activity and will continue weighing marketing alongside other investment options such as product quality and customer experience.
Ramos Calamonte detailed a range of shopping experience initiatives, including “The Heart,” a monthly program curating priority items and structuring the buying and communications plan around them. He said the rate of sale for Heart items has doubled versus other items, and ASOS plans to roll the approach into menswear.
He also said ASOS focused on its iOS app because app customers have roughly double the value of non-app customers. He reported app downloads have moved from a negative year-over-year trend to more than 30% growth. He said ASOS implemented 50 new app features in H1—including virtual try-on, “ways to style,” and a more immersive “trending” section—and described a more systematic testing approach, with the company more than doubling the number of tests and increasing the “hit ratio” by 16 points. According to Ramos Calamonte, daily users as a share of monthly users increased 60 basis points, and customers engaging with the updated app are buying 9% more.
AI was another major theme. Ramos Calamonte said ASOS expanded Microsoft Copilot access from 10% to 90% of employees, saving 35,000 hours. He said an AI-powered customer care agent increased customer satisfaction, improved containment, and reduced cost per contact by 90%. He also said 15% of software and 20% of buying decisions are already executed or supported by AI agents.
Looking ahead, Ramos Calamonte said ASOS plans to continue rolling out loyalty to more geographies, extend iOS improvements to Android and web, and land “at least 40” more app features in H2. He also previewed “AI Studios” as part of a broader push toward “ultra-personalization,” describing a model that separates product and model photography and uses AI to generate flexible, scalable content. He said more than 90% of the assets for April’s Heart were created using this approach, and ASOS aims to expand it across the business. When asked about traffic from tools like ChatGPT, he said it is “very small” today but expected to grow.
Management also discussed the Middle East situation, saying the company has seen some freight inflation but “not” product cost inflation beyond freight and “not” changes in market pricing levels so far. Ramos Calamonte said ASOS has managed freight impacts by adjusting country of origin and shipping methods, emphasizing the flexibility built into the model.
ASOS reaffirmed its FY2026 and midterm guidance. Aaron said the improving trends—women’s returning to growth, new customer growth, and disciplined costs and gross margin—support unchanged guidance, and he reiterated that ASOS’s fixed cost infrastructure and warehouse capacity can support growth “without further reinvestment.”
About ASOS LON: ASC
ASOS Plc operates as an online fashion retailer in the United Kingdom, the United States, Australia, France, Germany, Spain, Italy, Sweden, the Netherlands, Denmark, Poland, and internationally. It offers womenswear and menswear products. The company sells its products under the ASOS Design, ASOS Edition, ASOS Luxe, ASOS 4505, Collusion, Reclaimed Vintage, Topshop, Topman, Miss Selfridge, HIIT, AsYou, Dark Future, UNRVLLD/SPPLY, Crooked Tongues, Daysocial, Actual, and Weekend Collective brands, as well as through third-party brands.
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