ASOS Plc

So I don't need to get there. So good morning, everyone. Happy to see you again or to meet you, those of you that I don't know. And what a day to be in front of you, representing a digital retailer or a fashion company. We're living interesting times. Still, I'm really excited and really honored to be here in front of you representing ASOS today in my first set of results as a CEO. And the reason why I'm so excited is because I am a true believer that ASOS is a unique opportunity and we have a unique capacity to deliver value both to our consumers but also to our shareholders. A value that is built on our unique customer model, on our fashion credentials. But also a value that is built on our very dedicated and passionate team. And before starting, I would really like to take a second to thank them for the amazing effort they made for the last 12 months. And I think it's worth recognition. So... I think this is a great business, but there is a lot to do. And as we said in the RNS this morning, there's a lot to change. So today we're going to be trying to unpack a little bit what is it that we mean with this change. Let me first start by introducing Katie, our interim CFO, and she's going to be the person that is going to walk us through our results on fiscal year 22. And then after that, I'm going to be giving you a little bit more detail on this plan for change and why and how do we want to do it. So let's start, if I may. So, okay. Since I became CEO four months ago, so it's been a very long week of four months, I've spent a lot of time talking to people, talking to suppliers, talking to investors, talking to customers, and also talking to ASOSers, to our colleagues, to try to understand better the strengths of ASOS, but also our challenges. And in all these conversations, there has been a very clear red thread. And the red thread is everybody thinks... This is an amazing business and it has a great future. But also everybody thinks there is a lot to change if we really want to unlock this value. That is even clearer when you analyze the performance of ASOS in the last years, and especially in the last 12 months. And let me get a little bit into that and give you a little bit of the key messages that we would like to share with you today. First, it's very reassuring to see that the UK is still our core business. It's our fortress. So we see a very strong performance in the UK, and Katie will elaborate more on that later, so I don't want to take a lot of time here. And it's also very reassuring when we look into some of our brands, like Topshop, to see the performance of Topshop, and to see that, for instance, we more than double sales, which is even more, even overcompensating our expectations when we acquired the brand back in February 2021. But there are also very clear issues in our performance that I want to be very honest and transparent and share with you. The first one is, if you want, the unsatisfactory performance of our international business. It's quite clear that we're not happy with the performance, and I will elaborate more on all of them later. The second one is the reliance of our marketing and commercial model on markdowns. we could say unhealthy reliance or whatever, but certainly a certain level of reliance. The third one is that our operation model is not as efficient as flexible as we would need to really support a global operation. And I think it's something I will also elaborate a little bit more later. The fourth one is the lack of sufficient leverage on our data and our digital native capabilities. And last but not least, that we need to refresh our team and our culture. So these are a lot of issues, actually. And that's why what we're bringing here today is a very clear plan to tackle those issues. A plan that will be unpacked in two levels. One in the very short term for the first 12 months to make sure that we simplify our operation and we work and we make it more flexible and more resilient. And that we will build on four blocks. The acceleration of our commercial model. A very ambitious cost and profit boosting program to offset the cost headwinds that we're seeing. The third one is to make sure that we have the financial flexibility to implement all those changes. And last but not least, refreshing our leadership team and our culture, as I mentioned before. But also we're launching in parallel a comprehensive review of our end-to-end operations and how do we allocate capital across the different geographies. I'm going to elaborate more on that later, so don't you worry. These are very ambitious changes, as you see, as you can imagine, and I would like to highlight two very critical things that we are announcing in this RNS that are supporting those changes. The first thing is that we have proactively secured an agreement with our lenders to make sure that we have the financial flexibility. And Katie is going to give you much more color on that. And the second one is that we're also getting a lot of flexibility with the management of our stock that will come with very interesting and additional flexibility and cost impacts. So, as you see, a lot to change. I'm pretty sure that there will be many questions at the end, so I'm going to try to go fast. And I would say let's start first having a look at Fiscal Year 2022. So I'm going to hand over to Katie.

Thank you, Stephen.

Good morning, everyone. I'll start by taking you through the headline results for FY22. Before I start, I'd like to clarify that all revenue growth numbers are stated in constant currency and we have excluded Russia from FY21 H2 to ensure a like-for-like comparison. Total sales grew by 4% as inflationary pressures increased in the second half, impacting customers' discretionary income. Gross margin declined by 180 bps to 43.6% in line with the guidance we gave for the year of down 150 to 200 bps. Adjusted EBIT margins stepped back by 420 BIPs to 1.1%, with an adjusted PBT of 22 million and corresponding adjusted PBT margin of 0.6%. Cash capex closed at 183 million, a saving of 27 million versus guidance as we deferred some spend into FY23. And lastly, we closed the year in a net debt position of 153 million. Before I take you through the results in a bit more detail, I'd like to quickly call out some of the key operational highlights that we've achieved in FY22. Topshop performed strongly, delivering revenue growth of 105% year-on-year and contributing to gross margin expansion. At a group level, Topshop jeans are now the leading women's wear jeans brand on-site. We also recently launched the next chapter for Topshop and Topman on the 29th of September. This new collection is the first season that's conceived and created entirely under ASOS's ownership. We successfully launched Partner Fulfills in the UK with Adidas and Reebok last November. Subsequently, we have expanded into Germany, France, Spain and Italy and have several new brand launches planned for the upcoming months. This is key to gaining flexibility and enabling us to offer a more locally curated collection of brands without the corresponding inventory impact. We have seen 12% growth in our global Premier customer base, with Premier customers shopping three and a half times more than an average ASOS customer. Our Premier offer is key to driving loyalty and engagement amongst our customer base, as well as increasing our average customer value over time. We have continued to collaborate with our brand partners on new collections. Recent examples of this include our partnership with Netflix to launch Reclaim Vintage and Stranger Things. This was a sellout with 10,000 units sold and it resonated strongly with our younger female demographic. Within Sportswear, we collaborated with Nike to create a campaign that highlighted the best of Nike footwear, styled with a curated edit of ASOS design, Topshop and Collusion clothing. This leveraged our in-house creative and studio functions as well as the ASOS media group and led to an uplift in Nike campaign lines by 124% in the first week. And lastly, within the U.S., we launched a range of ASOS Design, ASOS Lux, and ASOS Curve dresses exclusively for the U.S. customer, and have now launched U.S. Design in 14 stores in the U.S., with an expanded collection available at Nordstrom.com. Looking at our operational KPIs, we've seen a growth in visits of 1%, which is a lower growth rate than in FY21. The key driver of this decrease is the boredom browsing seen during the COVID lockdowns, driving high visits in the base period. The upside of this is that we saw a corresponding increase in conversion rate of 20 bps, reflecting an uptick in the percentage of engaged shoppers. Firstly, a reminder that we disclose ABV net of returns. ABV declined by 3% year-on-year, driven by the step-up in returns rate. The returns impact was partially offset by price increases and the higher mix of occasion wear, driving increased ASP. As the premier customer base grows, we see ABV decline whilst frequency steps up. Therefore, we look at ABV in conjunction with average order frequency, which at plus 5% more than offset the decline in ABV. And lastly, we saw a 2% growth in active customers as customer acquisition slowed year on year. Jose will talk to this in a bit more detail later on. Turning now to our segmental performance. The UK grew by 7% for the full year despite a marked change in customer behaviour from April due to accelerating inflationary pressure as referenced at P3. This growth was underpinned by strong KPI performance. We saw a shift in demand into occasionware, supporting ASP growth, along with a 5% growth in active customers, 5% growth in average order frequency, and 6% growth in premier customers. Revenue grew by 2% in Europe. We saw a decline in France year-on-year as demand shifted back to online channels and a slowdown in growth in Germany as customers were exposed to the cost of living pressures. From a KPI perspective, we saw 2% growth in average order frequency, 5% growth in active customers, and a pleasing premier customer growth of 33%. ABV stepped back by 4%, driven primarily by the step-up in return rates. The U.S. grew by 10% year-on-year, supported by wholesale expansion, top-shop growth, and a more locally relevant offer. Visits fell by 8%, but we saw a 20 bps improvement in conversion. ABV grew by 4% as demand shifted into dresses and higher ASP categories. Average order frequency remained flat year on year, and customer acquisition slowed in the US as we paused our broad-breaching marketing campaign in the second half. However, pleasingly, we grew our premier customer base by 19%. Within the rest of the world, we saw a decline of 9%. The first half continued to be impacted by the continued delivery disruptions. However, we saw this ease in the second half with a return to standard delivery propositions and the resumption of Premier in Australia. We saw most KPIs step back with declines in visits, ABV and active customers. However, we saw a step up in average audit frequency and 208% growth in Premier customers. Gross margin declined by 180 bps to 43.6%. This was primarily driven by increased markdown and elevated freight costs. The increase in markdown was primarily concentrated in H1 as we cleared through the late arriving spring-summer stock. We did, however, see an improvement year-on-year in H2 as we cycled a period of elevated markdown in the prior year. Turning to freight, we saw an impact of 180 bps year-on-year driven by higher rates in the market and an increased use of air freight to circumvent supply chain disruption over peak in FY22. The year-on-year impact improved slightly in the second half as we benefited from both a higher mix of air freight and improved contracted freight rates. These increases were partially offset by mid-single-digit price increases taken across ASOS brands, as well as improvements in buying margin and the growth of Topshop, which has a higher retail margin. Turning to operating costs. Distribution costs increased by 30 bps year-on-year, of which 100 bps was driven by the impact of the COVID-related returns benefit unwinding. Along with the increase in split orders as we brought Litchfield online, this had a cost drag but provided a stronger experience to the customer who was able to access a greater selection of products. This was partially offset by supply negotiations and the flexible carrier strategy, allowing us to dynamically allocate volume to the cheapest carrier. Warehouse costs increased by 170 bps, of which 80 bps was driven by the impact of the COVID-related returns benefit unwinding, along with an increase in labour costs and the launch of Litchfield as a manual facility, which was a cost drag. The elevated inventory levels also resulted in inefficiencies in our warehouses. Marketing costs increased by 60 bps as we launched our test and learn approach to broad breach marketing. We decided to pull back on this in the second half given the unfolding macroeconomic backdrop. However, we have incorporated learnings from the initial advertising campaign into the development of a new advert which was launched towards the end of September. Operating costs, excluding depreciation, were 10 bps higher year on year as we worked hard to offset inflationary pressures through our Operational Excellence Programme. In total, across the P&L, we delivered 120 of operational efficiencies to largely mitigate inflationary pressures. Other operating income was 20.6 million for the year. This includes 1.2 of income received following the decision during the year to sublet part of ASIL's site at Leavesden, and a 19.3 gain from closing out the ruble hedges, which were no longer required following the decision to spend trade in Russia on 2 March. This gain was, however, more than offset by additional costs, including those incurred to clear through the resulting excess stock and fulfilment centre inefficiencies. There was a 350 million cash outflow in FY22, primarily driven by a substantial working capital outflow associated with an increase in stock. This increase was driven by several factors. A marked slowdown in demand, driven by global economic uncertainty in the second half. The timing impact of FY21 stock that was received in FY22 as a result of shipping delays. the earlier receipt peak stock for FY23, and finally the impact of increased returns in the second half of the year. Capital expenditure totalled £183 million, of which we spent £123 million on technology investments in support of the development of marketplace integration required for partner fulfills. continued optimization of customer experience, and investments in support of ASOS's progress against its data strategy. We also spent $60 million on supply chain in support of the automation programs in Litchfield and Atlanta. I'll now hand it back to Jose.

Thank you so much, Katie. So as I said before, a lot to change. And I'm going to start by changing one thing. I forgot to click before, so maybe I was driving everybody crazy because I was talking about that slide that was not being shown. So my apologies. So a lot to change, and a change that is going to start with... Our cooperation, our fortress, the UK, and as Katie, we really want to build upon this strength. And as Katie highlighted before, it's an operation that has behaved with resilience in the last year, and we are satisfied with the performance. But if we look back in time, it has been a very consistent performance. It's not only last year. For the last five years, we have grown on average 20%. And a growth that has taken us to be the market leader in our segment in the UK, with a market share of 10%, more or less, on the online UK market. I think it's north of 10%, so it's a significant one. And with a very consistent and relevant contribution to profit, as we shared with you earlier. last year. So it's clearly, as we say, our fortress. And it's a strength, it's a cooperation that is pretty much built on the fundamentals of our business. There are the three that we mentioned also back in October last year, is the fact that we are creators of fashion, that we have our own brands, brands that can only be bought at ASOS, and a good example is Topshop, and what we shared today about the performance of Topshop and how it is growing and attracting new consumers and making them more more sticky to the proposal of ASOS. The second one is that we're curators of fashion. We're not only selling our own brands. We are selecting the best of more than 850 brands, 850 of the most relevant brands in the planet. And we are making this selection because we want to offer the consumers the best of fashion. And by doing that, sometimes we have access to exclusive products, or we have access earlier to other brands' products, or we even are capable of creating our own visual assets on these specific products, like the picture you see here on the range of Adidas, which has had a very, very positive reaction from our consumers. And last but not least, we are champions of style. And what we mean with that is that we have a unique capability to put together our brands and THERPA and these are brand partners. And we put them together in a context of fashion. And in fashion context is everything. And the same dress with sneakers sends a very different message than the same dress with high heels. And that is one of the things that makes us such a great partner for some of our suppliers because we can do things like what you see here with Nike, and this is a real campaign. We took Nike and we put it in context with our own brands in a context of fashion, in an outfit of fashion. And that opens the door for some of these brands into new consumers. In this case, more feminine consumers, younger consumers. And it also opens the door for these brands into new occasions. They start thinking of Nike not just as what you wear when you go to run in the park on Saturday morning, but as a part of a fashion outfit that you're going to take to a party. So I think that when you put the three together, It's when you see the power of the concept and what is underpinning our resilient performance in the UK. However, we're not happy with the level of performance we had in other markets. We have failed to reach the level of success that we are looking for. And that is if you want a little bit of the diagnostic I was sharing with you before. The first thing is, well, we think we have a complex and stretched footprint globally, and that is creating a certain level of dilution that seems to be behind the disappointing sales growth that we're seeing. And disappointing, not because it's not growing, but it's not growing as much as we would like, especially when it's put into the context of the investments, of the efforts we're making in those geographies. The second one is that we see that both our commercial and marketing models are really reliant, or are reliant, I wouldn't say really, they are reliant on markdowns. Too reliant, maybe, and that is, on one hand, is weakening our gross margin because we end up selling more markdown than what we should, and on the other hand, is also creating a slow traffic, because apparently we're not getting enough quality engagement with our consumers, and we see that in the evolution of the traffic in some of these geographies. The third one is that we see that this global footprint has taken us to a complex end-to-end operation model that is not giving us the flexibility and efficiency we need to be really a winner in this industry. The fourth one is that we have to leverage more on our data capabilities and our native digital capabilities, and we're not doing that enough. And the fifth one is that we need to refresh our leadership and our culture to make sure that we bring the necessary level of drive and passion to make all this change happen. So, as I said before, a lot to change. There's no question. And... That's why we are determined to make it happen. We are taking very firm action to build upon our core strengths, because we believe that the value of our model is still there, but we have to build to make sure that we create a company that is different, that is built, if you want, on four specific pillars. Simplicity, speed to market. Speed to market is absolutely critical in fashion. Operational excellence and flexibility and resilience. And these four mantras are pretty much in everything we are doing now and we're going to do during the course of the next 12 months and several years. And I'm pretty sure that this is going to really position ASOS in a much better place, not only to navigate the current uncertainty, but also to be in a better position to become and to emerge as one of the global winners after this crisis. This change program is going to be unpacked in two different levels. One more focused on the next 12 months and focused on simplicity in the business, but also making sure that we create the necessary level of resilience and flexibility in the business. And I will elaborate more on this one right now. But also another set of activities where we're going to look much more into our capacity to create long-term sustainable growth and is going to... imply a comprehensive program or a comprehensive review of our end-to-end operations and our capital allocation logic. So always with the ambition to really, and that's why we put a star there, to reach our North Star that is really to become this fashion destination, this global fashion destination. So let me give you a little bit more of color about the change program we are putting in place. And as I said, the first part of this program is more focused on the first 12 months, on this financial year for us. And it's built upon four pillars, as I indicated before, which are the renewal of our commercial model, putting in place a very strong and determined plan to offset the cost headwinds we are seeing coming from stronger order economics and also a cost optimization program. ensuring that we have a robust and flexible balance sheet, and I will elaborate a little bit more on that, and with a refreshed leadership team. And the ambition, obviously, of this is to tackle some of the issues that I shared with you before, to improve our gross margin, to accelerate our time to market, to make sure that we have a more profitable operation. So, as you will see, there's a very clear rationale behind that, and it's a clear connection, I hope. So let me go one by one. On our renewed commercial model, and I always use one image. Sorry, probably the lack of proper words in English forces me to use images, and maybe it's not the most appropriate one, but still I'm going to use it. We sell fresh fish, and fresh fish is only relevant as long as it is fresh. The moment it's not fresh, it stinks. Just keep that image in mind, and then you will understand what I mean here. We need to make sure that what we put in front of our consumers is relevant. It's contemporary. It's the trend of the moment. Because if it's not, it's not fresh fish. And frozen fish is good, but it's not fresh fish. It's a completely different business. We had that very clear last year when we came in front of you in October, I think it was. And we talked to you about how we wanted to refresh our commercial model and that there were going to be some changes coming. So what we're doing here is accelerating those changes. We already started the implementation of this model. We changed our organization back in January of this year with the ambition to really implement that. And as I said, we are accelerating that. We are accelerating the fact that what we want is to be able to put in front of the consumers merchandise that is the merchandise of the moment, the merchandise that they have to buy now, because it's not buy now, pay later. It's buy now or cry later. That's probably more the motto of it. In order to accelerate that on top of these organizational changes that are already in place, what we are doing is we are also adding... more flexibility to our teams in the way they buy. So that means more flexibility in how they buy Our brand partners, that is coming through direct to consumer or partner fulfills, as Katie shared before. But we also have the ambition to offer ASOS fulfills. So when we have the merchandise in our warehouse, but it belongs to our partners. But also with our own brands, with this test and react. And this is something we already do, but we're going to, as we said actually last year, we are accelerating and we're going to keep accelerating more and more to make sure that we get that. We're also changing our buying. We have already changed our buying processes. So we are buying with a different logic, with a logic that is much more built on return on purchase. Well, I will not lose you with that. And with a logic that is much more focused on you have to return on what you get and return fast, otherwise you will not get your budget. and with the idea that we increase the visibility of these relevant products on the site. That is also complemented with a more efficient stock management, and that means we have to clean faster. The merchandise is relevant, and when it's not relevant, we have to get rid of it. And that comes with a setup of faster routes to clear and more efficient routes to clear. And in order to accelerate that model is when we're going for a stock write-off, as I think Katie mentioned before. Stock write-off of somewhere between 100 and 130 million pounds to make sure that this model is in front of the eyes of the consumer as fast as possible. It will happen during the course of the year. It's not happening in one go. But that's why we're getting into that. That stock write-off will result in a reduction of stock, reduction of complexity, therefore faster time to market, and also a reduction of cost. So it's going to come with clear benefits for ASOS. The output of doing all that will be to increase our gross margin, but also to accelerate our time to market and to accelerate our stock turn, therefore reducing our working capital. The second part of our program is a very ambitious plan to mitigate the cost headwinds we are seeing. Obviously, I mean, that is not a secret that there are very clear cost headwinds coming from the inflationary pressures. And this program is built on two main pillars. The first one is that we want to reinforce our order economics, especially outside of our key strategic markets. And that means we are revisiting our positioning in those markets. That can be our pricing. That can be our service levels. That can be the prices of our service levels. That can be our delivery services. But that is also reducing the split deliveries. That is dragging our profitability with higher costs. And on top of it, we have also an optimization cost program. Very clear optimization cost program. We're launching a lot of initiatives. Let me just summarize some of them, but by no means this is exhaustive. We are going on our logistic costs. We are consolidating some of the ancillary warehouses, not the core warehouses, but some of the smaller warehouses that we're using to operate. We are using the opportunity to increase our operational efficiency, and also the reduction of stock will certainly help here, but we are also reducing our overhead costs. That is going to mean the simplification of processes and organization, the reduction of external support, or the reduction or the rationalization of our assortment, therefore the simplification of our operation. As I said before, you're going to hear the word simplification So my apologies already. And we will also benefit from the improvement on freight costs. Last year, as Katie shared before, there was a big negative shock. And this year, this is coming back to a certain extent. So that will also help in this program. The third pillar is that we want to have enhanced flexibility to make sure that this agenda of change takes place, to make sure that this change happens and it happens now. And this is built on two things. The first one is that we have proactively negotiated our revolving credit facility. That's what RCF stands for. I'm sure you know, but I have learned that in the last weeks. With a waiver of our covenants and... That is giving us access to gross cash or committed facilities up to 650 million pounds. Ample room, more than enough room to maneuver and to make sure that the necessary changes happen. The second thing is that we are revisiting our CAPEX. We are going to reduce our CAPEX versus the ambitions we shared with you last year. So we will be moving on a smaller bracket or a lower bracket of 175 to 200, and this is coming from the fact that we are going to delay some of our automation projects in some of our logistics facilities, while at the same time we will protect as much as possible our investment in technology, because this is going to be one of the enablers of future growth for ASOS. And last but not least, we are refreshing our leadership and our culture. Obviously, we need the necessary drive to make all this change happen. This is a lot. And that is going to come through a new organization that we're bringing in place, an organization that is more focused on operations and commercial terms and is, it will not be a surprise, simpler. And that means we're reducing layers in our organization. We're also ensuring that we have the best mix between internal and external talent. So there are going to be internal opportunities for our team, but we will also be bringing external talent to complement some of the capabilities we are lacking or they are not necessarily, they are not developed enough. And we want to ensure diversity, and diversity from all points of view, obviously from a gender point of view, but also from an international point of view. If we, and we do want to become an international player, we need more international talent. And last but not least, we are launching a program for a cultural refresh. We want to refresh our culture along the lines of, surprise, simplicity and transparency, but also of ownership and entrepreneurial spirit and excellence and innovation. And excellence is an important word. Excellence in operations is going to be one of our motives if you go back to the four pillars that I shared with you before. This program is going to happen in parallel with a comprehensive review of, as I said, our end-to-end operations and our resource allocation logic. I know that sounds a little bit abstract, so I'm going to try to illustrate with some examples, so maybe that will help better understand what I mean with that. We are reviewing our operating model, and that, for instance, means things like our end-to-end stock management. So we are in the process of reviewing and improving our end-to-end stock management with the ambition to have more capacity to act at any point of the value chain on our stock. For instance, we have a stock bought in China that was going to be shipped to Germany, but we decided that it's better to ship it to the U.S. We want the capacity to act as fast as possible so that that happens, and we are in the process of doing that. We're also revisiting our logic of investment across geographies. That means having a wider toolbox when we invest in new geographies. Today we go with one model fits all, and we are testing new models. For example, we are testing a wholesale model in the US, and that could be a new tool that we could use in certain geographies. We could be operating under a wholesale logic in some geographies. The third one is that we want to complement our customer acquisition strategy. As I said before, with pushing this new commercial model, we need to complement it. And we are exploring adding on top of what we do today things like a differential customer experience or more upper funnel activity. And last but not least, I also mentioned before our need to better leverage on our own data, and we are having very clear efforts on, for instance, personalization that is going to be one of the critical ones and is already one of the critical ones. So that's just to illustrate that a little bit so that it doesn't sound so abstract. I'm pretty sure that by putting these two plans together, we are driving the necessary change to have ASOS prepare, as I said, not only to navigate the current troubled waters, but also to emerge as one of the winners in this industry, because our core business model is worth it. And that's why I told you I was so excited, because I think the size of the opportunity is gigantic. All these plans are reflected in our guidance for fiscal year 23, as it is in our RNS of this morning. But I'm going to try, I will not walk you through all the detail, among other things, because I forgot my glasses, so I cannot even see it. But I will try to give you just the three or four critical messages. The first one is that Well, you know better than me, these are very difficult times, very convoluted times, and forecasting in these times is very difficult. Someone much brighter than me said recently, when it comes to forecasting, there are two types of people. The people who don't know, and the people who don't know, they don't know. I'm going to try to be one of the first ones, so I don't know. So we're not giving you guidance in terms of sales, of... In that sense, but what we are assuming is that the market is not going to recover very fast. It's going to take some time. And in this sense, what we are doing is focusing on what we can control, right, and on what we cannot control. And what we can control is the evolution of our gross margin, and we are coming with a plan to increase our gross margin based on our new model, on the new margin logic, and increase flexibility in our buying, reduction of markdowns. and also helped by the change in the freight cost trends. The second one is that, as I said before, we have a very ambitious plan in terms of order, economics, and costs to more than offset the cost headwinds. So this is clearly one of the highlights. The third one is that, as I said before, and as a result of the acceleration of this commercial model implementation, we will be... taking a write-off of between 100 and 130 million pounds of stock, and that is going to create, as I explained before, very clear and positive side effects in terms of less complexity and less costs in our supply chain. And last but not least, even though we have anticipated a modest negative or zero cash flow for the year, that actually is going to be accelerating during the course of the year, so it will be better H2 than H1 for sure, We are happy, and I will repeat it again to share with you, that we have secure, proactively secure enough financing to give us ample room to maneuver and to make sure that this plan for change now happens, and it happens in the way it should. So I'm going to just finish with a summary, and even though if you think I didn't say enough, some words, I'm going to repeat them one more time so that I make sure you get them. We have a very clear idea of what we need to change, and I hope that I was able to convey that message to you this morning. This change is going to start by leveraging our cooperation, our fortress that is the UK. But it's going to evolve into an organization built on simplicity, on speed to market, on operational excellence, and on flexibility and resilience. That is unpacking on two plans, one in the short term, as I said, focused on simplicity and flexibility. which is going to mean less stock, less cost, more cash, and a refreshed leadership and culture, and in parallel, a comprehensive review of our resource allocation and our end-to-end operations. And with that, I'm going to simply finish the presentation and open for questions. Thank you very much for your patience.

It's Jose, and hi, everyone. So Eddie's got a roving mic, which he will move around with. And we'll also take questions from the offline online participants. So, Charlie, I saw your hand shoots up first. If you don't mind just introducing yourself and saying which institution you come from. Thanks.

Thanks very much. So it's Charlie Muir-Sands from BNP Parabank Xan. I've got a few questions, but I'll try and limit them. Firstly, with respect to the clearance of the inventory off the ASOS site, can you just talk about the kinds of channels that you're considering and how you're going to protect the ASOS brand there? in that or is this mainly clearance of third-party brands and therefore they won't be associated you know with you um secondly uh i wondered if you could just talk about where returns rates have settled in recent months you know obviously had that surprise spike um you know are they still above the pre-pandemic levels or are they kind of settling back down as consumers adapt to the new normal And then thirdly, with respect to the wider review, do you contemplate that this could actually involve a significant withdrawal from any major markets that you're in? I think a year ago at the Capital Markets Day you reported, for example, that the U.S. was quite heavily loss-making, and presumably that's got a lot worse since. Thank you.

Do you want to start?

Okay. Let me start with the clearance. So we are finalizing all the details of this clearance plan because obviously we're talking about a big pack. And that is going to imply several channels. But we are protecting our brands and we're protecting our operation because the vast majority of it is going to happen outside our channel. That will imply working with third parties. And there are a myriad of these third parties. So it's not only jobbers. There are a lot of third parties that we are going to involve in order to do it. But clearly protecting not only our brands, but also our brand partners.

If I do returns. So that's a very simple one. Returns rates remained elevated above pre-pandemic levels since May. So we've sort of seen that elevated and consistently sort of stabilised there at the moment.

And let me go for the last one. That is the withdrawal from markets. I think that that requires probably a little bit of elaboration on my side. And thank you for the question, Charlie. I think what we are saying here is like, I hope I will not say anything crazy. There are no sacred cows. We are going to have a look at everything. But this is not a binary decision. This is a decision of are there better models, smarter models to operate out there. There is no need to – let me take the U.S. because you mentioned the U.S. There is no need to consider to withdraw the U.S. right now. There are a lot of different scenarios where we keep on operating in the U.S. with a reduced level of effort on our side. So I don't think we're talking about withdrawing the U.S. right now. But we want to have more tools in our belt for the U.S. and for other geographies. Eventually, we will see what happens, but I think the U.S. is – we're not considering closing the U.S. right now. I don't know if that answers your question, Charlie.

Thank you.

Miriam Josiah from Morgan Stanley. Three questions for me. Just firstly on returns rates, you mentioned still elevated over the last couple of months, and obviously a few of your peers have decided to implement paid returns, and Boohoo have commented that they haven't seen a sort of negative impact from the introduction of that. So just wondering your thoughts around that, and then you mentioned sort of looking at the audit economics, so just wondering where that fits into potentially using that as a lever to improve that. Then secondly, I guess there's been some reports in the last couple of days that some insurers have been pulling cover for some of your suppliers. Just wondering if you could comment on that and just the conversations you're having with your suppliers at the moment and if there's been any change in any of your payment terms. And then thirdly, just if you could comment a bit on sort of working capital. I know you gave the range on free cash flow of zero to 100 billion. If you could just sort of talk about what that implies at the upper and lower end. Thanks. Do you want me to take the first or the second?

I don't mind.

Let me take the returns and then you take the payment terms and the working capital. So on returns, we have seen that some of our competitors are charging for returns, as you name Boohoo and Zara, charging for returns here in the UK. We are not considering to charge for returns in the UK, to be very clear. We think that our current order economics are solid enough to keep our current model, and we consider this a critical part of our value proposition. Whether they are seeing or not seeing a negative impact, I cannot comment. Obviously, I don't know. So I'm not sure if this is the case or not. It will be interesting to see, but obviously we will see what happens over time. But I cannot comment. I don't know.

So on the trade credit insurance, clearly suppliers take out trade credit insurance and we don't get any visibility of who's taken out what insurance with whom. What we can say is we became aware in August that one of the providers was cutting exposure to ASOS. We haven't seen any impact on the business since, but we understand that they had quite an excess of coverage. So by cutting it out, it was almost cutting dead wood out of the system, which is why we think that we haven't seen any impact. Clearly, the support that we've now got from our banks, we think, should give... strong reassurance from i guess the the trade credit insurance so we are anticipating that this should not cause these issues moving forward and then um in terms of cash guidance so the guidance that we've given isn't networking capital it's sort of total cash flow it has caused um some confusion so let me just try and add a little bit of color to to help that So we're not providing explicit commentary, but you need to think about the underlying EBIT and EBITDA and then take off CAPEX and the non-underlying items that we've laid out today, including the stock write-off, even though the majority of these are non-cash. The non-cash elements and the moves we're making to tighten our stock turn, you need to assess what and how that reflects in working capital. So as you'd expect from everything we've said and the timing of the benefits in the new commercial operating model within FY23, we are expecting a net working capital inflow. There are other moving parts, but they largely offset. So we are expecting increased interest from prudent liquidity management, but that will be offset by higher DNA. So hopefully that provides a little bit more context, but happy to go through in slower time if that's helpful later.

Okay, next question was Adam.

Adam Cochrane at Deutsche Bank. On that stock write-off, can you just run me through exactly what you're doing? You've got the stock on your balance sheet that you bought at the price. The $130 million is writing it off below the price you paid for it. then you're shipping it to a third party who will then sell it. So you'll get an inflow from that $130 million, but less than $130 million. Is that correct? Right, okay. Fine. In terms of when you were talking to the... the banks about your covenants. Did you consider renegotiating the length or the duration of the debt as well to give yourself a little bit more flexibility rather than having to do it again in the next six to 12 months? Or are you waiting to say, I think, maybe our performance will get a bit better so when we go in to renegotiate, we'll have a better position from which to renegotiate in the second half of the year? In terms of the EBIT margin, I didn't really follow your map there at all, if I'm honest with you. Sorry. That might have been a bit simplistic. But you're talking about gross margin being higher. You're talking about cost savings offsetting operational inflation. So other than deleverage on sales, should your EBIT margin be up year on year?

So marginally up, yes. Okay.

Thank you.

So you want to elaborate on the... And the second question as well. On the length of the... Yeah, let me do the length of the Wi-Fi.

I guess our focus was to make sure that we were able to get significant liquidity to underpin the plans that we've got for this financial year, and that was the focus of what we have achieved with the banks. You are right in terms of the RCF matures in July 24th, so at some point in the next 6-12 months we will be looking to extend that, but we're doing that separately. What we've achieved in terms of the covenant amendment is to give ourselves ample liquidity headroom to cover even our most downside scenarios.

If I may complement on that. I think that probably was easier to split it in two. And the fact that we have reached this agreement that is giving us this flexibility is showing a big support from our banks and from our lenders in that sense. So a big support and a big level of confidence in ASOS as an operation. So I think it's a pretty good piece of news, if I might. Obviously, we will need to have different conversations at a certain point in time, but it's something to celebrate.

Yeah, hi. Jeffrey de Mendez from Bank of America. I just have two questions, please. The first one is on your gross margin. There is an element in there that says that you're going to do less markdowns this year. Just curious to understand how you're going to do that if there is a lot of inventory in the channel, not just for you but for the industry in general. Does that mean that you're going to focus less on growth and say no to some sales that you could potentially make just to protect the growth margin? Is it the way you think about growth margin next year? And then the second question is on the UK market. I think you said that overall you expect apparel to come down in the next year. Can you remind us what you think it did this year when you did plus seven, just so that we can understand what could happen to ASOS UK next year relative to the overall market that would come down? Thank you.

OK, let me take you on the first one. I'm not sure what he did last year. But anyway, on the less markdowns, I think it's a quite interesting question. And it's going to give me the opportunity to elaborate a little bit more on that. We're not saying we're running away from promotions or markdowns. What we're saying is we're going to have less markdowns, and it's going to be on merchandise that is more relevant, which means we will be offering markdowns for consumers, but less. The second thing that I would like to highlight is that we have a really wide range of price points. As opposed to a monobrand, we are offering price points from very, very cheap to much higher, which always enables us to be able to offer to consumers relevant price points regardless of what they're looking for, because then normally they can find everything. That's one of the advantages of having an assortment of more than 250,000 options. We are not saying that we are going to reduce that. Obviously, we are cautious of the evolution of the market. We are seeing a troubled water. It's not that we're focusing less in growth. It's that maybe there is going to be less growth out there to chase this year than other years. I don't know if this is really answering your question. The market, I'm not sure.

I can't remember what the market's doing either, but share-wise we're sort of flat to up.

Yeah, we've got a little bit of share in the UK, but obviously share in this market, other markets share is totally outdated here, it's always difficult, but I think we've got a little bit of share.

So another way to ask the question is, do you think that you're still able to grow in the UK if the market's coming down? Yes. Yeah? Okay, thank you.

We think in the UK we have great opportunities to grow still. We are by no means – we have not saturated the market. MS.

Hi there. Andy Wade from Jefferies. A couple of questions from me. First one, looking at the new model, sort of about speed to market and fast stock turn and newness and freshness. I mean, that does sound like the old model, if you see. I mean, the ASOS pre the last two years, it was all about speed to market. It was all about getting fresh product in front of the customer. So I'm interested, is the new model like the previous old model and how is it different if not and the second one in terms of building order economics internationally I appreciate you talked about less split orders but the majority of it sounded to be around pricing so whether that be in product pricing or in delivery and how you charge for delivery Do you feel like you've got wiggle room in your price position in the market to have higher prices and still maintain or grow your share in those markets?

Let me take the first one. That's a very fair question, whether if the new model is like the old model or not. Obviously, ASUS is a fashion destination, and that has not changed between old and new. So having the ambition to have the right merchandise in front of the consumers is not different between now and then, if I can say that. We are trying to take it much farther in, sorry, let me call it the old model. I don't like to call it the old model and the new model, but anyway. In the old model, we would keep the merchandise in our system for longer because we knew that we could sell it without a loss. And the big change now, one of the changes now that we're saying is we're not going to do that. I said I'm going to remove it out of the system because it's not relevant anymore. So that is one of the big changes. The other big changes are coming from what I said before about giving our teams access. greater flexibility in how do they manage their assortments. The fact that they can have, with our third-party brands, models like Fulfillment, Partner Fulfills, or Asos Fulfills, gives them more flexibility, and that gives them more capacity to change. And the fact that we keep on accelerating on this test and react also gives them additional flexibility. So the ambition, if you want, is the same. I think that the mechanisms we're bringing in place are different.

And I guess the second part of the question in terms of order economics internationally, I think medium to long term we expect all of our markets to be structurally profitable. In terms of pricing, our pricing strategy is relative to competition, so that would be how we would always think about the core price of the product, whatever market it's in. But we have got opportunities in terms of the delivery options that we offer to still stay competitive but to change those to more cost-efficient, look at the thresholds we do for free delivery as well, and premier pricing. And with all of those, we think we've got scope to execute changes while still being competitive.

Next question is Anne.

Thanks. It's Anne Critchlow from Associated General. Two questions from me, please. First one, really easy. What was the percentage of own label last year, including ASOS, Top Shot, all the venture brands, everything, collusion? And then secondly, thinking about the weak pound against the dollar, historically, and this was before you had the U.S. warehouse, a weak pound was very favorable for ASOS. So just wondering if there is any sort of net gain there and what you would do with it. So would you lower the prices in the U.S. or have less inflation in the U.S. to improve the proposition? Or would you maybe take it to the bottom line? Thanks.

I'm not sure. I think that it has not changed significantly the percentage of our own brands over the total sales of ASOS. So it still remains in the 45% approximately.

Circa 40%. 40%.

I don't have the number in the top of my head, sorry. But it has not changed significantly. On the pound versus dollar, do you want me to ask?

Well, I guess in terms of pricing, the pricing strategy is to stay competitive within the local market. So that's what we would execute. And in terms of currencies, we are 90% hedged for FY23. So don't expect too much volatility on the bottom line either.

If I can, we're trying not to think of pricing as exchange rate. We have to be competitive in the markets where we're present. So it's going to depend on what is the pricing dynamic in the U.S. If prices remain flat in the U.S., we will remain flat. If prices increase in the U.S., we want to remain competitive because our obsession is not to be the cheapest. Our obsession is to offer fashion for value. And that's why we're not thinking of it like the evolution of the pound versus the dollar. We're thinking a bit about the evolution of the American market.

Next one's Caroline.

Yeah, Caroline Gulliver from Stifel. Just a couple of further questions, please. The first was on Premier customers. Obviously seen a nice increase, but it was only a 6% increase in the UK, which I think was to about 1.9 million customers of the 8.9 million. And I was just wondering what you thought it would take to increase penetration of Premier customers further, both in the UK and internationally. And then the second question was just, you mentioned one of the levers of growth in the U.S. was bespoke designs. And I just wondered if you could give a bit more color on how that fitted into the simplicity and how the efficiency of that works within the supply chain. Thank you.

Thank you.

I can take over if you want. Sorry, I was writing down, otherwise I forget. I'm getting old. So on Premier, how do we increase the value? How do we make it grow? I think it's about increasing value. It's making Premier more than what it is today. It's giving Premier consumers access to exclusive products. It's giving Premier consumers access to prices earlier, to sales earlier. We're working on this direction, clearly. So that's how we can grow it in the UK. Still, we think that our premier proposition is really good. Next day delivery for free and all your orders during the course of a year, it's really, really good. And probably it's just by keeping that, it's going to reinforce the value, given the changes that we're seeing in the market. On the specific designs for the US, this is a great question. And we have done it this year, and we have seen very good traction, to be honest. Within our ambition to have an ample assortment, but maybe also more efficient, that will be part of the considerations. I think there are other decisions that we have to take first before eliminating that. For instance, let me just illustrate with a very specific example. I think that there are parts of our assortment that are a little bit repetitive. I always come with the same example, so my teams are going to kill me. If you go to the men's underwear, we can significantly reduce our assortment there. We can reduce this complexity first, because this is adding less value, while having a specific dress, dresses, if you want assortment in the U.S., is adding more value. So I think that that is clearly the order of preference.

Next one is Shiri, yeah.

Hi, Shiri Malik from RBC. I have Two questions. The first one is about sourcing cost inflation and how much you think you'll be able to pass through to consumers over the next 12 months and going forward, and what's your strategy there? And the second question is, have you done or do you plan to do more extensive consumer research in terms of the perception around the product, the brand, the service, the price, the quality, just to make sure that that is where it should be in order to be able to successfully execute your plan?

Okay. On the first one, We are not thinking of pricing as cost plus. So we don't think we have an inflation in cost and we translate that to consumers. We think of pricing as a competitive pricing. So it depends on the pricing of the market. We have seen in the last year a certain level of inflation in the market. If we talk about the British market, but in all markets, in most markets, I would say no. So we are decoupling that. If you want, our reaction to that is... We have a competitive pricing, and then if we need to hit a certain margin, the way to do it is to re-engineer the products, not to charge more the consumers, because we will not be competitive. So we are decoupling this connection between cost inflation and inflation in prices. On the consumer research, this is a great one. To be honest, I'm not sure I have a very structured answer. Personally, I'm talking a lot to consumers, and we are having more or less every two, three months. I did it twice already. Meeting with consumers, but obviously that is not enough. That is more qualitative. That gives me the opportunity to talk to them and understand them better. I know there is initiatives in place in ASOS on a recurrent basis. But I don't know them all by heart, so I cannot really tell you. But we talk to our consumers on a consistent basis. I know there is a tool that we consistently get feedback from them through surveys, especially through the consumers that are more linked to ASOS. So there is this connection, and we are aware of the evolution of their perception of the brand, what they like and what they like less. And we try to incorporate that as much as possible into our daily dynamics.

Next is Georgina.

Hi, it's Georgina Johanan from JP Morgan. Thank you. I've got three very quick ones. I think quick ones, please. The first one, just on the stock that you're taking the provision against, sorry if this is a sort of a silly question, but just to check, is that spring, summer stock? Or are you actually taking a provision against some of the stock that's dropping for autumn, winter, but where you perhaps see yourself as being overstocked, given you're quite new to the role, Jose? And if not, given that the new model is only just launching now, how do you see your stock position going into the current phase? given you haven't really had time to make those changes. That was the first one, please. The second one, just in terms of the inflationary pressures that you referenced for this coming year, should we assume that's things like ongoing wage inflation in the warehouse, or is there anything specific to call out with regards to inflating energy costs? I know a number of retailers have put a number on that. And then finally, could you just give a quick update on where your supplier payment terms are at the moment in terms of days, please? Thank you.

So, okay. In terms of the stock that we're thinking, I think it's fair to say it's a mixture. So predominantly stock that we already have, but a tiny bit of stock that's coming in, as you say, as we rebalance the model. So overall a mix. In terms of inflation, you're right, a large part is wage inflation. Our energy exposure, which I actually think is fixed for FY23, is quite low, so sort of mid-single-digit millions. It's even lower than that, yeah.

I think probably that's impacting more people with a physical operation than us.

So we're relatively close to that.

The impact on our side is more on the delivery side, and obviously that is included in our numbers.

Yeah. It tends to be there. Sorry, remind me of the... Supply and payment terms. So I guess we disclose externally, I think, our average payment term of about 71 days, which... So we're not assuming any improvement in that, as you'd expect in FY23. Maybe actually a little bit of... We, during last year, gave some of our in-label suppliers slightly shorter terms, so that's factored in moving forward, but we're not expecting any other material changes. I know that we get called out sometimes for having longer payment terms, but that, I think, is due to our percentage of freight on board, so they tend to have longer, which we have quite a high percentage of, and our percentage of overarching brand suppliers as well.

On the stock, I don't know if I understood, you were asking us on the, I don't know if I understood the question properly, on the quality of the stock for autumn-winter, that was what you were asking? So I think in terms of quality, we're very comfortable that we're having the right quality, better than last year. Last year, we were having some, not just us, the whole market was having some issues with the supply chain. So this year, the quality of the stock is better. In terms of quantity, as Kate indicated, obviously, you know that there is always a certain lag in this industry, the moment you buy and the moment you sell. We have put in place measures to reduce that mismatch, but obviously there might be a certain mismatch and part of the stock write-off could be used for that, but the vast majority is old stock. Spring, summer or older.

Next is Tony.

A couple of questions about the UK, please. You're indicating that the level of markdown in the UK is higher than historically. I wonder if you could give us some sort of quantification of maybe something like the percent of your sales at a full price in the UK in the year just reported. versus historically, and what you would target going forward, medium term. Second question on the UK, is you've got 9 million customers in the UK, and you target 18 to 35-year-olds, I believe. So I think there's probably only about 15 to 20 million of those in the UK. So I just wonder, you know, is your strategy going forward going to be more focused on harvesting them more effectively, i.e., you know, sales per customer? And do you think that actually it's worth really pushing for a lot more customers, giving you high penetration levels? And one final small, small question. You mentioned repeatedly that you practically agreed the RCF.

have you actually agreed it or is it so in that case we have absolutely agreed all signed and sealed ok fine thank you the answers on the markdown to be honest I don't know what is the level of markdown in the UK I don't know if I don't have the numbers I don't know the level of markdown in the UK I know the level of markdown globally I'm not sure this is something we normally disclose We have obviously a plan to reduce that significantly. When you call full price, I think you mentioned full price sell-through. Am I correct? Yeah. We want to increase seven to eight points full price sell-through this year. So it's a significant increase, but still within the ranges of what is expected.

I think in H1, and we had a reasonably high level of markdown in the base period, so we're not expecting, I think, an erosion, but we're not expecting much of an improvement because we're going to be clearing through some of the stock that we talked about in terms of that stock clearance. We'd expect the improvement to come more into H2, as Jose said, because then we're expecting to push more into full price sales.

And then you were asking about the UK and how to grow in the UK, right, if I'm correct? So I think I totally get your rationale. But let me, if you want, give you a little bit of a different perspective. It's true there are only 15 to 20 million people. I'm sure you know better the numbers. But we are 10% of the online market, of the global market, we're significantly less. This is a market that is extremely fragmented. where there is clearly a continuous trend to move into online, and that trend is not going to stop. This trend is going to help us, not only us, all the digital players. We have a very clear opportunity on the masculine market in the UK, where we are very penetrated on the feminine one. On the masculine one, we have very clear opportunities to increase. And also, with our average basket, we have opportunities to increase. So I think that we are really far from having reached our level of saturation in the UK. We have ample opportunities still within our 18 to 35 years old age bracket.

One last question in the room and then we've got one online and then that's it.

Hi, it's Bianca from BNP Paribas. Hi, Jose and Katie. So three hopefully quite easy questions. So the first question is around sensitivity of your customer base to inflation. Because I remember back maybe a few months ago you talked about how Your target customer protects a lot of their income is spent on fashion. So I'd just be interested to hear in this current market if you've done any market sensitivity, market research into your customer base. Second question is around near sourcing of supply. Have you looked at moving a lot of your supply from Asia to, say, Turkey like a lot of your competitors have done? And if not now, when? And then third question is around the premier offering. Obviously, it's doing pretty well at the moment, but I think in terms of pricing, it's quite cheap. Also, are you looking to change the minimum order or the return value? Because I think that could be an area that you could change to actually increase profitability. Thank you.

Sorry, I'm writing down. I'm not that fast.

So in terms of, I guess, sensitivity to customer base to inflation, we think it's probably quite mixed. I think our demographic is less likely to be mortgage holders, which we think in the current environment will be a benefit to us. Thus, I guess, I don't think that this is a time that we're planning to be overly optimistic, but I think we're hopeful that our demographic will be slightly less impacted than the wider population.

And I think a little bit, as I mentioned before, this is... I'm pretty sure this is how consumers think. Pricing is relative. Let me explain what I mean with pricing is relative. It's relative versus the other options in the market, and that's why our obsession is to remain competitive. And the other thing is that we offer a really wide range of price options. We have entry price points that are as competitive as the cheapest of our competitors, and we go all the way up to the price points that we offer through some of our partner brands that are significantly higher. So our consumers have the possibility to move in this price range freely, provided that we're offering them the right fashion. And that's why this is our obsession, if you want. So I think we are... If I may say, they are better prepared than other competitors to face that because of the width of our assortment versus other competitors that are offering a narrower assortment, and they have a more difficult time to adjust to that. On the near sourcing, if I understood properly, Srivanka, the question is if we're planning to move everything from Asia to Turkey or parts of it. A portion of it. A portion of it. We are always looking into our sourcing strategy and try to optimize it. And let me share with you the way we're thinking of it. is not an entry margin, it's an exit margin. Of course, if you only think of the intake margin, Asia is always better than Turkey or the UK because you buy cheaper. That's not the way we're thinking of it. The way we're thinking of it is, what is the final margin we're getting? And of course, the production that we're doing in closer sources, we can do it with more information. And therefore, we can increase the heat ratio and reduce the markdowns. And this is another way to reduce markdowns. As a result of that, there will be some transfers, but these transfers are always going to be based on this logic of read and react. We read what is happening, and then we react with productions that are happening in shorter terms. There might be a transfer, yes, if we see attraction in the consumers, for sure. But it's a consequence rather than a strategy. It's a consequence of how do we react to the market. And on Premier, I guess you were suggesting?

We're cheap. We're cheap. I think that we're looking at all of the options that you mentioned, and we'll make sure that we balance the right profitability with being competitive.

Brad, there was one online, but it was wrapped into what Bianca was asking now. So I think one last question, Guido, and then we're pretty done. Okay.

Good morning, Guido Luccarelli from Citi. So the first one, can you disclose more details on the new liquidity covenant on the RCF? Is there just on a minimum level of cash that you need to have? And if so, what level is that, if possible? And secondly, if you could help us better understand the dynamics of the seasonality of your working capital. I mean, you threw down on the RCF in September with $300 million in cash at the end of August. So is there normally a significant absorption in working capital in September? Or was this a particular case this year? And finally, given the less, let's say, easy funding conditions in the market, Is it a fair assumption to assume that there are less smaller players who are relying a lot on easy funding and who are trading unprofitably in the market, so you might see less competition from these players going forward? Thank you very much. You want to take it first, though?

Let me take the first one. So as we've disclosed, we've replaced our, well, what was the existing financial covenants with a minimum liquidity covenant, which is basically net debt compared to gross available facilities. We can't disclose the absolute amount because I don't think the banks would particularly like it if we did, but it gives us, I guess, ample headroom against all of the plans that we've got and also prudent scenarios that we have to model as part of our year-end reporting. So we're very comfortable with the level of cash that we now have.

On what's going to happen in the market, I share the concerns with you. I think that the fact that we have a very solid base, as we shared today, puts ASOS in a good position to see what happens. Yeah, there might be some of our competitors that will either reduce their pressure in terms of marketing spend, or they might even simply disappear. So that potentially can open up some opportunities. Certainly so. Difficult to know exactly which ones and where, because it might not necessarily be in the UK. It might be in southern Europe, or it might be in the US. So we will stay vigilant. But as I said before, there are the people that don't know, and the people that don't know that they don't know, but right now it's very difficult to... to anticipate what is going to happen. What we know is that we are doing the right things to make sure that ASOS is resilient enough to take advantage of opportunities if they are there to be taken and to deliver what we want to deliver.

I think there was one, you had one question on working capital, which I don't think... Oh, yeah, there was one on working capital, you're right. Just the shape of the working capital. Just remind us what the question was. Seasonality of the working capital between H1 and H2.

So in terms of the normal seasonality of our net working capital is an outflow in H1 and an inflow in H2. And I guess we will accept the same shape in... FY23, albeit slightly exacerbated because of the stop-write-off model and the benefits from that kick in in H2, not H1.

Great. I'm going to hand back to Jose for closing comments.

Well, just wanted to thank you everyone for being here today. It's a very exciting moment for us because, as you may imagine, we have brought a lot of news to this morning and there was a lot of work from all the team and I would like to thank all the team that have been involved in that, in preparing that day and all the preparatory work and the negotiations with the banks and so on and so forth. We are very excited to deliver all that change, and we're looking forward to seeing you in our next meeting, in our reporting cycle, to be able to share with you how we are progressing, and hopefully it will be with a better economic environment. But if it's not, I'm pretty sure that ASOS will be in a good place. So thank you so much for coming this morning.