ASOS edges forward, still loss-making but margins grow, hard work is behind it

ASOS full-year results on Friday showed the fashion e-tail giant still with lots of negative numbers although its gross margin has grown and it seems closer to a return to growth if things go right for it.

The results report contained a lot of words in which the company reviewed its strategy overall and highlighted the improvements it has made, but jumping directly to the figures, it remains loss-making.

Looking first at adjusted figures for the 52 weeks to the end of August, gross merchandise value (GMV) was down 12% at £2.456 billion while adjusted group revenue dropped 14% to just under £2.465 billion. But the adjusted gross margin increase to 47.1% from 43.4%.

Adjusted EBITDA was up from £80.1 million to £131.6 million but this was below analysts’ expectations. However adjusted EBIT narrowed almost 50% at a loss of £32.2 million. The adjusted loss before tax improved almost 28% to £98.2 million.

Moving on to the statutory numbers, group revenue fell 15% to a little under £2.478 billion while the statutory gross margin at 47.1% was up from 40% the year before. The operating loss narrowed from almost £332 million a year ago to a loss of just over £212 million this time and the loss before tax also showed a strong improvement going from last year’s £379 million to a loss of just over £281 million this time.

The company said that for the current financial year (FY26), enabled by the strategic and financial progress made throughout its turnaround, it expects GMV to show an improving trajectory throughout the 12 months with the performance 3-4ppts ahead of revenue performance. 

This will be driven by continued growth of flexible fulfilment models and reflecting its mix shift it has moved to GMV as the primary indicator of its top-line performance. 

It will see further gross margin improvement reaching between 48% and 50% and further adjusted EBITDA growth to between £150 million and £180 million.

The company has been intensively restructuring its operations with an aim to deliver trends faster. Its Test & React model has successfully scaled to more than 20% of own-brands sales. And its partner brand product portfolio has been transformed. It has also put a number of operational efficiencies in place and strengthened its balance sheet significantly. It also referenced the successful relaunch of the Topshop brands, key leadership appointments during the year and important collabs such as the one with Adidas.

ASOS said its priority for FY26 is to deepen its relationships with customers and to make it not just a place to shop but a destination for inspiration and style. It’s leaning into what makes it distinctive, which it says is its unique assortment of the best own-brand and partner brand products, fuelled by speed and flexibility, styling that helps customers create outfits they love, and increasingly personalised experiences. It believes the most difficult work is now behind it.

FY25 deep dive

So looking back at the results for the past year, the GMV decline of 12% was quite significant, but it reflected actions taken to improve order profitability against a soft consumer backdrop. The top line performance was lower than expected but it said the quality of sales improved and the full-price mix increased with own-brand also gaining share within the mix. Its flexible fulfilment models gained significant traction and this broadened its product range without adding inventory risk, also ensuring that GMV growth outpaced revenue growth.

Its performance by individual markets saw the UK with GMV falling 7% while total revenue was down 9%. The number of visits and the number of orders both fell 12% and conversion was flat. But average basket value (ABV) was up 6%. 

The company said the UK performance was more resilient than other regions during the year and while active customers declined by 8%, customer retention is improving.

In Europe, GMV declined 16% with total revenue down 19%, or 17% like for like (LFL). Visits dropped 17% and orders dropped 20% with conversion down 10bps. But ABV was up 3%, or 5% LFL. The company said this was partly due to its actions taken to limit unprofitable orders and also due to macroeconomic pressures.

In the US, GMV fell 18% with total revenue down 25%, or 22% LFL. Visits were down 17% while orders dropped 24% and conversion was down 20 bps. But as with other regions ABV rose, in this case by 4%, or 8% LFL.

Again, in this market the full-price mix improved and the rate of decline narrowed from 31% in H1 to 21% in H2.

In the rest of the world, GMV was down 15% with total revenue falling 16%, or 14% LFL. Visits dropped 14%, orders dropped 17% and conversion fell 10bps. But ABV rose 1% or 3% LFL.