What ASOS (ASC) Said on Its H2 Earnings Call

Key Points

• ASOS returned to GMV growth in Q4 after declines earlier in fiscal 2026, with second-half gross margin up 340 basis points to 50.5% and adjusted EBITDA rising 29% to £170 million.
• An October cyber incident temporarily disrupted marketing and reduced GMV by an estimated 2%–4% during affected weeks, but ASOS said no passwords or payment details were accessed. Management expects low-single-digit GMV growth in fiscal 2027, alongside higher EBITDA and positive free cash flow.
• Net debt fell 40%, aided by £116 million in warehouse sales, while ASOS plans to invest in warehouse automation and AI projects to improve operations and shopping tools.

ASOS LON: ASC returned to gross merchandise value growth in the fourth quarter of fiscal 2026 and forecast further improvement in the year ahead, even as an October cyber incident disrupted marketing and weighed on recent trading.

The online fashion retailer reported adjusted earnings before interest, taxes, depreciation and amortization of £170 million, up 29% from a year earlier. Gross margin rose 340 basis points to 50.5%, while net debt fell 40%, helped by the sale of two warehouses.

For fiscal 2027, ASOS expects low-single-digit growth in gross merchandise value, or GMV, higher EBITDA and positive free cash flow. Chief Financial Officer Aaron Izzard said the company plans to spend the equivalent of 4% of revenue on capital expenditure, including warehouse automation.

Cyber Incident Weighs on Trading

Chief Executive José Antonio Ramos Calamonte said an unauthorized party used social engineering to send a push notification to some customers on October 6. An investigation conducted with external experts found that access was limited to basic personal information, with no passwords or credit card information accessed, he said.

ASOS temporarily paused some marketing and customer relationship management activity as a precaution. Management estimated the incident reduced GMV by approximately 2% to 4% during the affected weeks, primarily in the U.K.

Izzard said GMV was broadly flat year over year in the first eight weeks of fiscal 2027, including the disruption. The active customer base continued to grow sequentially in September and October, both globally and in the U.K., he said.

Ramos Calamonte said it was difficult to determine any longer-term effect on the brand, but the continued growth in customers gave management confidence that the trading impact would be temporary.

Margins Improve as Growth Returns

ASOS did not return to growth for the full year, but GMV trends improved as the year progressed. Izzard said GMV fell 9% year over year in the first half and 1% in the second half before returning to growth in the fourth quarter.

The U.K. led the recovery, with second-half GMV up 2%, while Germany also grew in the period and the U.S. returned to growth in the fourth quarter. France improved but remained short of growth in the final quarter, Ramos Calamonte said.

Womenswear sales rose 8% in the second half and 10% in the fourth quarter, after falling 2% in the first half. Menswear improved, but the CEO said more work remained.

Izzard attributed the gross-margin improvement to lower discounting, better full-price sell-through and buying margins, as well as a growing share of flexible fulfillment arrangements. Those arrangements let partner brands retain inventory risk while selling through ASOS.

The active customer database ended the year at 16.4 million, flat with the first-half exit rate, Izzard said. Ramos Calamonte said newer customers were buying more products at full price and across more categories, while their rate of repeat purchasing after 90 days had improved.

Cash Flow and Debt

ASOS reported a £16 million free cash outflow for fiscal 2026. Izzard said temporary working-capital movements contributed, including approximately $9 million in tariff refunds received after the year-end in September.

The company sold two non-core warehouses for a combined £116 million and repaid £74 million of convertible bonds that matured during the year. It ended the period with £328 million in cash and £87.5 million of undrawn facilities.

Izzard said cash costs for interest and leases should fall by £10 million to £15 million in fiscal 2027, with potential for further reductions through refinancing. He said ASOS did not provide an absolute free cash flow range because working capital can be volatile.

The retailer’s two remaining main fulfillment centers, in Barnsley, England, and Berlin, were operating at roughly 65% to 70% of order-throughput capacity, Izzard said. ASOS plans additional automation investment at both sites.

AI Projects Target Operations and Shopping

Ramos Calamonte said ASOS is working with Microsoft on a project called Fashion Frontier to improve its product creation and delivery processes. He said a purchase-order management agent was saving 500 hours a week, while a catalog agent was saving 300 hours a week.

Izzard cautioned that time savings would not necessarily flow directly to profit, saying employees could redirect time from manual tasks toward improving the customer proposition.

ASOS is also developing AI-supported shopping tools. Its AI Stylist was relaunched in October to half of U.K. iOS users and generated more than 100,000 conversations in a few weeks, Ramos Calamonte said. He added that more than 50,000 of those conversations resulted in relevant engagement and purchasing.

Management expects to provide more detail on its longer-term plans at a capital markets event later in the year.

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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