ASOS Plc

Okay, good morning. I don't need that, right? No, I have this. Good morning, everyone. Super, super happy to see you here one more time in our, in this case, fiscal year 25 results announcement. And I'm gonna cover the first part, the strategic part, and I'm gonna then hand over to Aaron, who's our CFO, and I will give him the opportunity to introduce himself much better later. He will do a better job. And he's going to cover our financial results over fiscal year 25 and our outlook for fiscal year 26. And then we will move to Q&A that I'm sure this is what you guys are looking forward to. So let me start sharing with you a couple of reflections. I promise I'm going to be short. Since I joined ASOS four years ago and since I became the CEO three years ago as well, I think it's clear in my mind, and I'm pretty sure you feel the same every time you come here, that this is a place full of energy, full of passion, and with a very bold ambition to become the most inspirational destination for young fashion lovers in the planet. But it was also clear that we had a lot to do to get there. And what I'm going to try to do today briefly is to try to cover these two things. The first one is like And you already know, but I think it's always good to do a little bit of balance and to take stock. It's like, what is it that gives us the right to compete in a market that is as dynamic as, probably I should say, ultra-dynamic as our market? And a market that is changing so much and where things like AI is bringing a complete revolution to the market. So what is it that makes ASOS different and gives us the right to compete? And where are we in this journey to transform ASOS into this very ambitious vision that we have? So let me start with the first one. What is it that makes us different? but sustainability in terms of profit. So it is a really, really bold, if you want, mission. And there are three main pillars that support this ambition. Three main things that, in our mind, makes ASOS different and gives us this right to compete and to win. The first one is our obsession to always offer consumers the most relevant product. And relevant means it's the right product at the right time at the right price. We have a unique model here. We have a perfect blend between our brands and the best brands in the planet. And that is very weird to find. You're going to find great brands out there. You're going to find great retailers out there. But it's very difficult to find a formula like ours. And we are working very, very hard in making sure that our assortment is the most relevant all the time for consumers. And I hope during the course of these years, I have been able to convey how important both elements are, our brands and our partners. And if not, hopefully today we'll be able to do it so that you see that the value of our formula and why is it different. The second part is that we are obsessed with offering an inspirational shopping experience. And we offer today a different shopping experience. I'm going to say that with this picture you're seeing here, that probably for you is just a nice and a beautiful picture. But in this picture, you see a model. She's wearing four different brands. She's wearing Good American. She's wearing Mango. She's wearing ASOS Design and Dragon Diffusion. ASOS is the only place where you can see a picture like that. It's the only place where consumers can see a picture as realistic as this one because this is how they behave. Most consumers don't dress top-to-top with one brand. This is how they behave. And by the way, this is incredibly valuable for the brands as well, because this is the only place where they can be in this type of context. And that makes ASOS shopping experience different and unique. and inspirational, and we think that gives us the right to compete and a place in the market. And we do all that underpinned by an efficient operating model. We're obsessed with efficiency, with effectiveness, and this is really underpinning everything we do. That's what we're convinced. We have a place in this market, and that's what we're convinced we can win and be relevant for our consumers. But to really deliver that, there was a lot to do. And I want to go fast over what we have done over the course of the last three years. I know three years is a very long period of time. But I think it's a good time to make this balance. And that's why I'm going to do it. And I'll not torture you for too long. This has been a long journey with three clear steps. And I'm going to go fast over the three steps. The first part of this journey was we had to deal with the legacy that we had. Three years ago, this company had two main issues, stock and debt. Very clear. We had 1.1 million pounds in stock. That is a lot of stock. That is more than 100 million units in our warehouses. That is a lot of stock. During the course of these three years, and you have heard me a lot talking about stock, maybe too much. I'm not going to talk about stock today, but you have heard a lot of that from me. we have gone from 1.1 to around 400, a little bit less than 400 million pounds in stock. That is a massive reduction of stock, somewhere between 50 and 70 million units of stock reduction. That is really, really big. Just put it into the context of the population of this country, and that will give you an idea of to what extent that was a big challenge. And why it was so important? Well, for a lot of reasons, but two. One, we were sitting on a lot of money. Obviously, that is not very smart when you're sitting on money and you're not doing anything with it. And the other one, this old stock was preventing us from offering new stock to consumers. And remember, we want to offer the most relevant stock. The stock from last year and last last year is the opposite of being relevant. So we really needed to clear that, and we've done it successfully. By doing that, we unlocked a great opportunity, which has been to optimize our footprint in terms of supply chain. And we have reduced our footprint in more than 50%. Obviously, that unlocks cost improvements, cost optimizations, and we have really seized that opportunity and taken it. And the second big challenge was depth. And as you have seen during the course of these three years, we have been restructuring our debt. We have been looking for flexibility and liquidity. The last time, it was last week, so you saw that we announced a successful restructuring last week that is giving us even more flexibility and more liquidity, and this is exactly what we wanted to get. And while we have done this, we have reduced our net debts in approximately 40%. So we consider that we have successfully reset the essential foundations of our model. It was absolutely a must. There was no way to move on without doing that, and we are happy we've done it, and this is water under the bridge. Then we had to transform, refresh, I don't know which one is the right word, our business model. We were transitioning from a business model that was built on a lot of stock, a lot of stock, as I said before, a lot of promotion, a lot of performance marketing, into a business model based on speed, agility, and profitability. It was very, very important to prove that we can make money while we do business. Otherwise, we become a different type of organization. And we started that journey by focusing on what is important for consumers. That is to give them better product. This is not what they want. They want relevant product, what they are looking for at the moment. They are not looking for a bargain necessarily. They are looking for something they like at a competitive price. And we did that build on three critical ideas. The first one was we want to make sure that we are first for fashion. And the word behind that is speed. We have to be very fast to be able to offer our consumers what they want right now. This is one of the critical elements that our own brands play in that equation. They are our best opportunity to be super fast and react much faster to what the consumers are demanding. And that's why we're in a better place than just a pure retailer because we have a weapon they don't have. In these three years, we have been working on systematic solutions, not just a solution. We want a system that brings improvements and continues bringing improvements. And that is what we have done pretty much on everything we have been implementing and obviously on the product side. And I think this is also a very important idea that I wanted to share with you, this obsession with systematic solutions. So, we have been working on accelerating our time to market. And on average, we have accelerated our time to market by 30%. But if we go to our flagship project in this space, that is our test and react, but I also talked a lot about test and react in the past, not today. It was a project. Today is more than 20% of our business in our own brands. Today is a reality that is really changing how we show in front of our consumers and the type of value proposition we can put in front of them. The second big idea was to bring more flexibility in the relationship we have with our partners. More flexibility means more ways of doing business. Not just one avenue, now we have several avenues. And this is helping us to do quite a few things. Obviously, one is to deepen the relationship with some of them. Some of them are growing very healthy because of that. And today it has gone from a project to be more than 10% of our business with our partners is done through these flexible models, either what we call partner fulfills when they do the delivery or ASUS fulfilling services where we take care of the delivery, but it's like businesses, it's a different way of doing business. And also very important is that work we've been doing in how do we define our portfolio of brands, what we offer our consumers. I told you that this is about offering them relevant product. Not all the brands are relevant to consumers all the time. So in these three years, we have done a lot of, I don't know if the word is cleansing or sharpening our brand portfolio. We had approximately 900 brands three years ago. Today, we will be more around 600. That has not been a journey of minus 300, because in this journey, we have added more than 100 new brands. So that gives you a little bit of the idea. We have probably changed 50% of the portfolio one way or another. And we have not only done that. We are working more and more with our partners to develop exclusive products. Today, we develop exclusive products with approximately 40 brands worldwide. Again, our flagship project here is our call-up with Adidas that you have seen all over the place. It's quite a unique call-up. It's a multi-year type of collaboration that I think shows the role that ASOS can do with this type of brands, and it's generating a lot of positive effects with Adidas and a lot of interest in other brands. And we continue going in this direction. So we feel we have really had an impact on the assortment, on the value proposition our consumers see in front of their eyes. And this... additional speed and this additional flexibility has been complemented with a very rigorous inventory management. Remember what I told you about systematic solutions before? We have a systematic way to deal with our inventory. We have a systematic way to tackle the problems early and not late. And putting together speed, flexibility, and rigorous inventory management has helped us to significantly accelerate our structure or to improve Reduce our cover, increase our stock churn. It's pretty much the same one way or another. In the last two years, we have reduced our cover by 20%, and that is having a very big impact on the quality of what our consumers see and what they're exposed to. but also our profitability, because by offering our consumers better products, they buy more products full price, and then we can improve our margins. And that has had an impact, obviously, on our margins. We have systematically increased our gross margin. Last year, 370 basic points. We landed more than 47%. I remember three years ago when I said our ambition is to go to 50%. Some people said, you are crazy, and probably they were right, but not because of that. Today we're at 47, and we are convinced we're in the right way to get to 50. We are really taking the right steps to get there. And this is pretty much built on this flexibility and this capacity to sell more full price by coming faster to the market. That has been complemented with our effort in our efficiency. As I told you, it's one of our pillars. We have looked for systematic solutions. That is giving us relevant changes. Like we have significantly reduced our retransmission. Our underlying returns in 150 basic points, or we have reduced our supply chain costs during the course of the last year, approximately 20%. And we continue finding new ways to improve our costs with these systematic solutions. When we put it all together, we wanted to change our business model, to have a business model that gives us speed and profitability. I've been talking about the speed. Let me tell you about the profitability. Last year, we increased our EBITDA by more than 60%. We have increased our profit per order by 30% approximately. This is now a healthy business model that is producing profitability. So we feel in this second step of the journey, we have certainly moved the needle here and we are in a place where we are now having a business model that is giving us what we wanted. That's why we feel that the time has come to really focus on re-engaging with our consumers. focusing on bringing them back to ASOS, on regaining their hearts and minds, and again, positioning us as the most inspirational destination for young fashion lovers. And we are gonna do that based on three main ideas. It's always three, I'm sorry, I'm a pretty boring guy, but it's three, three, three. You can call me Mr. Three if you want. three main ideas. The first one is a product we sell fashion. I have told you many times we are a fashion company that has technology that runs through our veins. So we're going to double down on all the exciting things we're doing to have the best product, the most relevant product in front of the eyes of our consumers. We're going to invest in putting our brand more in front of our consumers with a really ROI-driven mentality. That is very important. And we are reinventing our shopping experience. Let me give you a little bit of color on each and every of these ideas, but this is what is giving us the confidence that we are in the right path to really return to sustainable and profitable growth. So let's talk about products. Let's talk about What is it that we're going to do this year? And the expression is quite simple. It's double down. We're going to continue doing what we've been doing, but more. So we're going to continue working on speed and flexibility. We're going to take our test and react from 20 to 25. We're going to take our flexible fulfillment from 10 to 15. We're going to continue accelerating. We're going to continue going fast, fast, fast, more relevant, more relevant, more relevant. We're going to also invest more in quality. We are investing in fabrics. We're investing in workmanship, in feeds. We're going to continue doing that, investing in improving the sustainability of our fabrics and our materials, fabrics in general, not only fabrics but also trimmings. And that can be seen in some of the new lines we've been launching recently. These are three examples here. You will see here Arrange, BraveMax, and ASUS Collective. Different lines we have launched recently, all of them with a focus in higher quality, all of them very successful. They are having a very, very good reaction from our consumers, and they are really resonating with them. And the last thing, we will continue sharpening our brand portfolio. That means new brands coming, so there are going to be more brands coming. That means more collaboration with the brands. The same thing we have done with Adidas, where we are going to, this is a systematic solution again, we're going to start expanding that to other type of collaborations with other type of brands once we have shown to the world what we can do. Then we go to taking our brand in front of our consumers. And we're convinced that there has never been a better time to do that. And why is that? Well, first of all, because we have the right product. Second, because we have the right economics. As I told you, we have increased our profit per order by 30%. And third, because in the last years, we have learned a lot about how to do it. And we have increased the return on the ROAS of our marketing actions during the course of fiscal year 25. The second idea why we think there's never been a better time to do it is because we have a very, very clear strategy. We will continue increasing the ROAS of our performance marketing, where we are in a very positive path, and we are going to invest in expanding in more frequency, in more breadth, in more quality of interactions with consumers. These interactions happen in real life, with pop-ups, with events. They happen in... in social, they happen in campaigns, and we have been learning how to do that, and we feel we are now much better equipped to do that. And what is giving us the confidence that this is true is that we are seeing very positive signs right now. We have seen that during the course of fiscal year 26, new consumers are growing in the UK by approximately 10%. We are seeing that we are getting more engagement and more average spend from our consumers. We are seeing that our retention rates in fiscal year 25 have improved significantly. in general, but more especially with our best consumers where they have improved 80 basic points. And we are seeing that some of these marketing actions that it took us some time to learn, now they are having an impact. Let me just illustrate it, for instance, with the pop-ups we are doing. At the beginning, we were really not Getting there, the last two pop-ups we have done, one in the U.S. and one here, we have got sales per square meter. Sorry, I still think it's square meters. I don't know how to do it in square feet. I still struggle with that. Sales per square meter that are comparable with the most relevant operations in the market, and they are generating hello effects. that are really visible for us, and we are seeing how it is impacting in the areas where we do these pop-ups. So we see it's starting to work the way we want. So we are convinced this is the time to double down on what we're doing with marketing. And the last thing comes to the shopping experience. And let me go back to this idea that we offer a unique shopping experience. And again, this is... You see a picture here, but what I see here is three brands perfectly blending into one picture. Here you will see ASOS design blending with another storage and with Arketch. There is no other place in the planet where you can see that. That's why I say we always offer a unique experience, but we want to make it even more special for our consumers. This is going to be done on three axes, on three ideas. Again, three, sorry. Outfits. Outfits was always at the core of what we do, but we're going to take outfits to a different level. Engagement and personalization. And all this is powered by AI. I know it's going to sound like, okay, you had to drop AI at a certain point in time. Now is the time to drop it. That is not the case. It's like AI is transforming this industry. I'm absolutely sure. And it's not just a belief, because I believe in that. I'm seeing it. I'm seeing it with my own eyes, and I'm seeing it in ASOS. It's just like AI is opening possibilities that a few years ago, even months ago, but certainly years ago, were just like a dream, like an ambition, but it was not possible. Today is possible. And that is going to bring a lot of, I would say, tailwinds to the digital world. Tailwinds, yeah. And... We are right there to do it. And we are very, very much into it. Always with this mentality of systematic solutions and with a mentality of very rigorous investment. But we are there. So this is something we have already started recently. And let me share with you some of the things we have started to do. One is the launch of our loyalty program, ASOS World. where we have launched a loyalty program really aligned with our value proposition of delivering excitement, inspiration. So it's not a loyalty program based on discounts. Sorry if you were expecting that. This is giving access to consumers to exclusive products, early access, exclusive experiences. We launched it with a small cohort of consumers. I think it was in March. We really opened it to a bigger audience in the summer. In the UK, both, during the course of the first six months, we reached a million consumers, a million members. Today, we are north of 1.6. We're very, very excited to see how fast this is growing and even more excited to see the impact design on consumers. Because what we see is that consumers that join our program increase their frequency, and they not only increase their frequency, we get a more qualitative relationship with them. So we depend less on paid marketing, which obviously is good news for us. Second one is ASOS Live. We launched on-demand shopping platform. Every consumer that is interacting with that, 50% of them go to review the product, and they all increase the quality of the relationship with us. increase their conversion rates, and the time they spend with ASOS, which is also very important for us. And the third one, the third example that I wanted to show you here is Topshop. You know we relaunched Topshop.com in the summer. We have seen that the vast majority of the consumers that are interacting in Topshop.com are new consumers to ASOS. So it's not consumers from ASOS that now are running through Topshop. It's new consumers to ASOS. And these are consumers that are coming with bigger baskets. So it's quite an interesting way of capturing consumers. This is only the beginning. There is so much more to And I want to share with you just some examples, because this is much more of the things that are coming. And I told you there are three main ideas. One is outfits. So you're going to see outfit generator. So consumers will be able to choose one item and then request that we generate an outfit for them, what we will use, what we know about them, and what we know about the trends to generate an outfit that is relevant for them in this moment. They're also going to be able to save outfits, to search outfits, to look into the outfits of their celebrities they follow. So there is gonna be a lot of completely new experience or improved experience around the idea of outfits that was already present in Asia. Second idea was about engagement and there is a lot about making it more immersive and obviously that means a lot of video. We're gonna see much more video coming to the landing page, to the product pages, to the list pages. We're going to see shoppable reels. We're going to obviously expand our loyalty program. Consumers will be able to search by trend, by occasion. We're going to incorporate much more community and influencers. There's a big, big change here. And the third idea that I told you is personalization. Absolutely critical. There is this 4U tab. We launched an AI stylist in the past in a collab with Microsoft that we are going to improve even more in a renewal of our collaboration with Microsoft. And consumers will be able to personalize their search, make sure that the brands they love are more present in their search. So it's really a big, big change. But instead of hearing me talking, talking, talking, I thought that maybe it's interesting that you see it all together. Because when you see it all together is when it comes to life much better. So let me share with you, if I can. They say that an image is better than a thousand words, especially they are my words. So very, very ambitious program. Really a step change in our customer proposition, in our shopping experience, and a step change that is going to be delivered this fiscal year, 26. And you're going to see a big change between what you see now and what you will see in a few months. So we are very, very excited about that. And I'm sure our consumers are going to be as well. This is such an amazing change. So let me conclude by kind of summarizing. As I told you, we have a very bold ambition. We think we have a place in the market and we can win and we have to go through different steps to get there because it was a big change. We feel we have addressed these issues, these legacy issues, and we have set the right foundations, structural foundations for this business. We have successfully transformed this model so that we can offer to our consumers what they want in a profitable way. We are in the right moment, in the right time to really re-engage with our consumers. We have a very clear plan. You've seen it. We have all the determination. The first signs we are seeing from the market are positive. We see growth in new consumers in the UK. We see some geographies offering very interesting performance. We see visits doing much better. We see that the signs are here, and we're totally determined that now is the right time to do it. So now I'm going to hand over to Aaron. He's going to be really giving you the real stuff. I gave you the blah, blah. So please, Aaron.

Thank you, Jose. Before I jump in... My name is Aaron Izzard, as I've met some of you before, but I'm really proud to be standing as CFO to present FY25 financial performance. And before I jump into the numbers, I think it's important to step back and say, what was FY25 about from a financial perspective? It was about delivering the second stage of our transformation, delivering sustainably profitable baseline for us to move forward and deliver against the third stage confidently. And it was really important to me in stepping into this role to make sure that we approached that second stage with the appropriate depth and rigor that it required to make sure that we can move confidently forward. That meant a deeper focus on variable and fixed cost optimization to make sure that we explored and delivered additional opportunities to set us up for FY26. And the financial performance I'm going to talk you through reflects that. So I'll talk you through all the metrics. Firstly, GMV. This is our appropriate new measure for customer purchases, if you like, and it's our primary indicator of sales. So this reduced by 12% year-on-year, which is a reflection of the cautious consumer backdrop, but also the deliberate profitability actions that we took. Because of this, the quality of our sales improved. Growth margin increased by 370 basis points as a result of the increase in our full price mix and reduction in discounting. Cost to serve, whilst reduced by 12% in absolute terms, increased by 130 basis points. But when taking account of the deleveraging impact of our volume reduction of 200 basis points, there was around 100 basis points of efficiency improvements, which I'll talk about a bit more later. This contributed all of this together towards an improvement year on year in our EBITDA, adjusted EBITDA, of over £50 million to £132 million. From a balance sheet perspective, we reduced our stock further by £118 million down to just over £400 million. This is a reduction of 23% reflecting the new operating model that is now fully embedded and the rollout of our new flexible fulfilment models. This represents the inventory cover that we will take forward as Jose's already referred to. Free cash inflow of £14 million, slightly reduced versus last year, owed to the huge reduction in inventory that we delivered in FY24, yet still the £14 million was ahead of guidance. And finally, our net debt improved by £112 million to £185 million. This is as a result of the Topshop, Topman, JV that we entered, and the subsequent structural refinancing that we undertook in early FY25. So looking at the geographies, the As you can see, there was a reduction in GMV across these geographies, but the important point to note is that profitability improved across the board, which was our main priority for FY25. There are a couple of geos, though, that I want to explicitly call out. The UK, at minus 7%, was more resilient as our home market, where consumers really responded to the product actions that we took, but also, of course, in a cautious consumer backdrop. And the other one is the US. Minus 18% does not tell the full story The U.S. was the first market that we took deep profitability actions in FY24. And many of those actions annualized in the second half of FY25. When combined with the benefit of our sales of moving the fulfillment back to Barnsley and from the Atlanta closure, this opened up a wider assortment of product to the consumers. And those two actions combined with a number of other specific growth driving activity that was in the U.S., H2 performance was minus 7% year on year. And Jose's already touched on it, but I'll talk a little bit more about some of the more recent trends later on. Key driver of our profitability improvement, as we've already said, was our gross margin improvements year on year. The main benefit within this was from the commercial model. And what this highlights, again, as Jose's already touched on, is that when we surface the right product, fresh product to consumers, they're willing to pay full price. And that's highlighted in the improvements in our margin through the new commercial operating model. We also delivered improvements through the success of our commission-based flex fulfillment models, and this contributed to the 370 basis points improvement in gross margin. It's important to note, though, that this isn't the result of profitability actions. This is a result of the improved offer that we've generated for the consumer, and the gross margin is the output. More choice, newer, fresher product, and a cleaner on-site experience all delivers a better experience, and that's resulted in the improvements in our gross margin. I've touched on this already, but our overall cost to serve in absolute terms reduced by 12%, but that is an increase as a percentage of sales by 130 basis points. The volume deleverage, as I've mentioned, accounts for 200 basis points reduction, but also we absorbed the inclusion of the top shop royalties, which weren't prevalent in FY24. That meant an underlying improvement in our efficiency, variable cost in particular, efficiencies of around about 100 basis points, which was predominantly driven through supply chain, through reduction in returns rates, as again, Jose has already touched on, the various different efficiency projects that we've landed. There is also a modest improvement in these numbers from a number of sizeable projects that we landed towards the end of H2. Most notably, the exit from the Atlanta warehouse, which generates annualized savings that we talked about previously. But in particular, renegotiation of global distribution contracts, which has delivered a significant benefit, all of which will be felt in FY26. The combination of embedding this new operating model and the cost efficiencies more than offset the volume deleverage and was the main contributors towards our improvement in adjusted EBITDA of £50 million year-on-year. This represents significant progress, and alongside those locked-in benefits that I've already mentioned that we deliver towards the end of Q4, gives us the platform to confidently move forward into our third stage of our transformation. Moving to cash. FY25 saw a modest inflow of cash of around £14 million ahead of our guidance as mentioned and as a result of our improved profit and discipline across the board. The new operating model delivered net working capital benefits of around £40 million as we normalise our inventory cover. Continued investment discipline reduced our capex by £50 million year on year to £86 million although this increases to £100 million when you include the Atlanta automation spend, which was subsequently reclassified to non-underlying. Net interest of £33 million reflects reduced term loan interest from the refinancing that we did at the start of FY25, but only includes half a year of the 2028 convertible bond interest. I'll talk a little bit more about structural free cash flow in the guidance section. Finally, before I move on to the outlook, I wanted to talk about the refinancing that hopefully you all saw announced last week. So maintaining our investment discipline is absolutely critical going forward to deliver on the final stage. But we embarked on this process in addition to the efficiency projects that we landed to create the investment fuel towards the end of FY25. We embarked on this project and that one to improve our flexibility as we move into the final stage, and I'm confident that this refi supports that flexibility required. This refinancing effectively replaces our first lean Bantry Bay facility, the RCF and term loan, and delivers three significant improvements for us. Extended term of five years out to 2030, additional liquidity headroom of £87.5 million, and a reduction in our interest rates, which delivers cash interest benefits on an LFL basis of around £5 million. This refinancing reflects the strategic and profitability actions that we've taken, and also reflects the partner confidence in our strategy going forward. So I'm just going to turn to Outlook now. The clicker works, thank you. So we expect in FY26, with the new offer that we're accelerating, for our GMV to show improving trajectory throughout the year. And within that, our GMV, we expect to perform around three to four percentage points ahead of revenue performance. Now we've touched on it already, but we've already seen an improvement from the enhancements that we're making to the consumer offer in the metrics that we're seeing in FY26. So there's been an improved sales trajectory, in particular in the UK and US, some of our core markets. But more importantly, the lead indicator for mid-term growth is new customer acquisition. And our new customer acquisition is improving across the board and is in 10 percentage points of growth in the UK year-to-date. We expect gross margin expansion of at least 100 basis points above 48%. And this, coupled with the efficiency benefits in the sizable projects that we landed towards FY25 combined, gives us the confidence in delivering 150 million to 180 million adjusted EBITDA in FY26. We're expecting broadly neutral free cash flow in FY26, which I'll come on to and talk about on the final slide. In the medium term, our guidance hasn't changed. We're expecting a return to GMV growth and adjusted EBITDA margin of 8%, which will contribute towards adjusted EBITDA sustainably being ahead of CapEx interest and leases to generate structural free cash flow positive. Finally, I wanted to give a bit more context. I've been talking about this structural free cash flow throughout this presentation. But I think it's important to do that, to look back over the last couple of years and how we've generated our cash. And the chart on the left here shows that a big driver of our free cash flow positivity in the last couple of years has been through the benefits in working capital as we've reduced our inventory. But we have shown improving structural free cash flow benefits in the far left-hand graph here, which shows our free cash flow is through working capital. We expect our FY26 adjusted EBITDA of $150 to $180 million to offset the CapEx leases and interest. But if I use FY26 as the platform for our medium-term aspirations and targets, there are a number of additional aspects in our mid-term guidance which we expect to deliver sustainable structural free cash flow generation. Improvements in our operating leverage through our GMV growth, continued expansion in our gross margin towards 50%, and capex of 3% to 4% of sales will all represent opportunities to continue to enhance our structural free cash flow. And we are not relying on any one of them individually to be able to deliver that. To wrap up, we're really, really pleased with the progress we've made in FY25. FY25 was about setting a structurally profitable base for us to move confidently into the third and final stage of our transformation. And we're really, really confident in the plans that we've got in that final stage to be able to deliver growth and meaningfully, meaningfully free cash flow, positive generation. Thanks for your attention. Now move to Q&A. Q&A.

For a Q&A, as usual, we'll start with questions in the room first. If you could introduce yourself and where you're from before you ask your questions. That would be great.

Looks like it's Anne first. Thanks very much. Anne Critchlow from Berenberg. I've got two questions, please. So I noticed that average basket value was up more strongly in the US and the UK. Just wondered if you could comment a little bit generally about average basket value, splitting it out between like-to-like inflation and mix. And do you see perhaps more potential to add more premium brands to the site? Is that the direction of travel? And then secondly, if you could just comment on performance by category, so women's wear, men's wear, sportswear, and formal versus casual, anything that's interesting and anything that you need to work harder on. Thank you.

Yeah. Thanks, Anne. Jose, do you want to start with both of those questions?

Yeah, I'm happy to do that. Morning, Anne. Good to see you. So we have seen average – sorry, I was going to say internal jargon. I shouldn't do that. Average basket value evolving positively during the course of the last – not only the last 12 months, probably more the last 24 months. And we read that, obviously, as an impact of our strategy to be able to have a more qualitative relationship with consumers, and then they buy more food price, hence less of a discount. So we've seen growth of 3% to 5% consistent year on year, one year, another year. And that has happened, if you want, so far, not through a growth of number of units, but not with a decrease of number of units. So it's pretty much stable. It's more a growth of the value of the items consumers are putting in the basket. A different thing is what you were asking about more premium brands. And we have added a lot of brands, 100, during the course of the last 12 months. Some of them are more premium. I was showing a picture with Arketch that can be considered for us a more premium brand. Or another story, in the other picture it was Drown Diffusion, but this is a Vax brand, also can be considered more premium. It is having a very good – good American could be probably another example. It is having a very good reception with our consumers. So we are seeing an interest in brands that are – I mean, the word premium is premium for our consumers in the perspective of the market. They are a little bit of mass market or higher, higher up, the upper part of the mass market, the high end of the high street probably I could say. is having a very good reception. Our consumers want relevant products. And when it's relevant, if it's a little bit more expensive, they are willing to pay the money for it. So certainly it's a direction of travel. We are bringing more of these brands because we're seeing that our consumers are interacting well with them. So at the same time, we keep on bringing other brands that are lower price points, and we have other consumers that are fine with that. We always try to keep a very, very broad assortment for different types of consumers. And then in the performance by category, we are happier with the performance in women's wear, definitely. It's the part that is working better, is where we have put more effort, and I mean, not trying to damage anyone. Clearly, this is the core of our business. It's like the business in fashion. And this for ASOS is pretty much in women's wear, so this is where we're seeing a better performance. Sports, we're seeing a very good performance in apparel of sports, which was not the case in previous years, that all the performance of sports was coming from footwear. Now it's coming more from apparel. Footwear is a little bit weaker, to be honest. And in our case, I mean, apparel is doing incredibly well, also fueled by some of the collabs we are doing. The collab we're doing with Adidas is having a really big impact. So obviously that is also doing it, if you want, it's amplifying the... In terms of categories, we're happy with jersey, with needs, but there is not a clear stand out in terms of categories. So we're happy with what we're seeing in the collection and it's fairly well balanced.

Thanks, John. Would you like to go next?

Yeah, thank you. John Stevens at Pearl Hunt. A couple of questions as well, please. who the customer is in terms of the 10% growth in UK customer base you've seen coming through. Are they, you know, hitting the same metrics as your existing core? Are they buying the same stuff? Are the KPIs the same? Can you sort of talk about, you know, how you're attracting these guys in and what they're delivering to the mix? Secondly, just in terms of cost efficiency, Aaron, you mentioned obviously a lot of the work done last year. There's obviously a lot of life-like cost reduction coming in this year. Can we quantify that? And finally, if you can comment on what you think the right balance sheet structure will be for ASOS in the sort of, you know, two or three years out.

Thanks, John. Jose, do you want to take the question on new customers first, and then Aaron, you can take the second and third questions.

Good morning, John. Good to see you. So, yeah, we're happy with what we're seeing in the UK, seeing new customers. Obviously, it's very early to understand very well these new customers because the fact that they are new means that they have not interacted so much with us. But if you want, in general terms, what we're seeing is that customers are improving the quality of engagement with us. Let me explain what I mean with that. They're buying more categories. We are moving away from, I mean, moving away, not completely, but we are reducing the amount of new customers that come on by only one category. They're buying more categories. They're buying less promotion. We're also seeing that. And also, they're buying more fashion-oriented type of products. So, in principle, it's all good signs. Because we know when consumers buy more categories or buy more fashion categories, they tend to be better consumers over time. But it's still early to know if that is going to have an impact or not. What we have seen is during the course of fiscal year 25, we have reduced churn on all types of consumers. So I think it's probably somehow correlated.

Thank you, John, for the question. I'll take the first part first. So the cost benefits. I'm not going to quantify it, but what I can tell you is a number of the various different projects that we've done. So, as I mentioned already, we have the benefit from the annualization of Exit in Atlanta. We've already talked about the values there. Significant benefits from negotiation of our distribution contracts. That's globally. It started in the UK. As you can imagine, a sizable project that we expect to have huge benefits in FY26. We are also reviewing all of our various different SAS contracts and SAS operations to streamline our underlying support in tech and continuing to review our returns fair use policy and various different activities to improve the experience for consumers and we expect that to improve our returns rate as well. In terms of the balance sheet structure in two to three years, our goal is to be neutral on debts and not have a net debt. But ultimately, what we want to do over the next few years is focus on growth. And the important thing for me when delivering the refinancing was making sure that we give the flexibility to the teams and the focus to make sure that if there are high ROI opportunities, that we can invest in them for growth. But ultimately, we're building towards generating free cash flow and getting ourselves into a net neutral position, which will also help us capitalise, of course, on interest costs in the future. Do you want to have the mic?

Sorry. How much of a restriction was the lack of headroom in the old facility? Did that actually stop you?

So I wouldn't say restriction. Ultimately, we've created more flexibility. We had previously 150 million term loan, and the RCF wasn't available based on the ABL facility. What we've got now is a facility of 150 million and 87.5, which is readily available. So it creates additional headroom for us that allows us the flexibility to move forward.

Mia, I think you've got a question next. Hi, it's Ms. Strauss from BNP Paribas. Just two from me. Maybe if we can maybe look at the customer profile over the last five, say, five to seven years, what sort of age demographic you're looking at? So maybe is the customer five years ago someone who was 20 years old and they've now grown to 25? And do you have enough of the Gen Z cohort in that or do you need them? And then secondly, what sort of impact are you seeing from TikTok shop and how you plan to compete with them? Because they're obviously more of a discovery sort of platform. So I appreciate the AI initiatives you're doing on your side, but is it maybe a little bit too late or just how you plan to address that?

thanks i think jose if you take both of those questions yeah so on the customer profile obviously we measure the average age of our customers and what we have seen over the course of the last five years probably not sure five maybe a little bit too but over the few years is that it has not changed significantly i think we have got i'm going to try to be too precise probably i'm wrong 11 months older so it's not a massive change it's pretty much it's pretty much in in the same in the same space You were dropping something interesting in the question. It was like this Gen Z, do we need them? It's like our bull's eye, if I can use that expression, is 20-somethings. We used to use that expression. It's people in their 20s. Obviously, Gen Z would be probably a little bit young, but anyway. But that doesn't really mean that we only talk to these consumers. You go to your bullseye, but you know you have consumers that are older and younger for sure. So, yes, having some Gen Cs, of course, having Gen Cs plays a role. And we do have Gen Cs, and actually that's why we have such a broad assortment. We have some of our brands that are more targeted towards these younger consumers, whether Gen Cs or Gen Cs. or Gen Alpha, whatever they are now. But it's not the core of our consumer. It's not that Gen Z is where we are. It's not the bull eye, if that makes sense. Or not yet. One day they will become bull eye. Then on the TikTok shop, we are present in TikTok, which seems to be something really, really big in the US, not so big in the UK. We're not seeing such a huge explosion in the UK. We really use TikTok as a place of discovery, but not necessarily where people are executing the purchase. So we're present in TikTok with a TikTok shop. And we also have our social marketing happening not only in Instagram, also in TikTok. We're pretty active. And it's true. It's a place of discovery. It's a place where people go to find new brands. But at least in the UK and in Europe, we're not seeing this explosion that they seem to be having in the US.

But we're there.

And if that becomes a bigger channel, we will obviously capitalize on that because our obsession is to be where our consumers are. So it's like we're agnostic about that. It's like we want to be wherever they are.

Just wait one sec for the mic. You got it.

Just to follow up on that, maybe what is your approach to the marketing side? So I appreciate that maybe the transaction doesn't happen on TikTok, but how do you get them from TikTok onto ASOS when you've got tools like the AI stylist and things like that?

That's a great question. TikTok or Instagram could be similar. Obviously, we have a big presence there. We are working not only organically. We also work with content creators, with influencers from more well-known to less well-known. When we did, for instance, the relaunch of Topshop.com, we worked with Cara Delevingne, so super iconic. But we are working every day with influencers. So the ambition is, as I was saying before, to be where our consumers are, to be top of mind for our consumers. Then there is a transition into ASOS when they have more of the intention to buy. Once they come to ASOS, tools like the A-Stylist plays a very important role in going back to this idea of the outfit. It's like consumers, what we see is that consumers don't buy one thing isolated. They want to buy a dress, but they want to understand how to wear this dress, which are the right shoes, which one is the right bag, which one is the right makeup, which one is the right... So there, today, we have always been, in that sense, different because we've always brought this idea of outfits. but it was, if you want, in a sense, a little bit static. It was much better than going to a physical store, because in a physical store you could see 10 outfits, and in ASOS you could see 100,000 outfits. But it was static. Everybody was exposed to the same outfit. Suddenly the AI stylist, so AI as an enabler, is giving us the possibility to generate a specific outfit for every consumer. And that is incredibly powerful. What we're seeing is that the consumers that interact with the AI stylist, they increase by 50%, I think it is, the amount of items they save for later. And we know that this is a leading indicator. When people start saving for later, they end up buying. So it is having a big impact. We're working, as I said before, this is something we did in collab with Microsoft. We are not generating our own LLMs or anything like that. That would be completely crazy. And... we will continue, we are renewing our strategic alliance to continue developing that and to make it even better. The more we train the model, the better the model knows the consumers and the better the recommendations. And we are seeing an evolution there. So we see that there is a very natural flow from I discover a place where I can find what I want, so I really want to transact with that place, and then I want to do it in a more comprehensive way. Sorry, a very long answer. But don't let me talk too much because I could talk for hours.

Sarah, do you want to go next and then Yash after?

Thanks. Sarah from Barclays here. So just firstly on the guidance adjusted EBITDA of 150 to 180, can you just take us through the puts and takes of what you need to believe in to get to the higher and the lower end? And at the higher end, you have to believe in a return to growth next year. And then secondly, more broadly, we've seen a lot of headlines about agentic e-commerce in the news recently, potentially changing how consumers shop online. Just curious what your thoughts are and how ASOS fits into an agentic e-commerce world. Are you making investments in tech and product at the moment? And I suppose, could you consider partnerships with some of the AI players, as we've seen Shopify do in the U.S.? ?

Thanks. I think, Aaron, if you take the first question on guidance and Jose, you can take the second one on agentic AI.

Thank you, Emily. Thank you, Sarah, for your question. We've built our guidance for next year so that it doesn't require growth. That's the exact reason that we, you might say, extended our process on the second stage of this journey, creating us the flexibility, creating the investment fuel to be able to move confidently into the third stage. So within that guidance range, there is no explicit requirement for us to return to growth. But of course, what we've guided to is an improving trajectory on GMV, and that's what we're building towards. I think for us, really the key thing is we've landed that second stage. We've created the efficiencies that enable us to move into structural free cash flow positive. The focus now is on making sure that we double down, as Jose said, on that final stage across investment in marketing, which will have a higher return on investment against it, against the customer experience, and continuing to enhance our product offer. That's the focus. That's what we're getting everyone in this business focused on. And as we do that, it will enable us to continue to move through the guidance range.

Yeah, so on agentic e-commerce, I guess you refer to checkout happening directly in chat GPT or whatever of these things. So obviously, probably we're going to get there. I think it's a very, very likely direction of trouble that is going to move from what today we call SEO more to... I think they call it GEO. Sorry, I'm awful with these PLAs. There are so many. So it's a different type of search engine type of optimization and marketing into this. And it will be a big change in the market. But at the end, the consumers will have to find a place to close the transaction. So obviously, we are open to that. I mean, as I said, we want to be whatever our consumers are. We just want to make sure that we offer the best assortment, the best shopping experience, and we are convinced that that is the winning formula. Then you were talking about us partnering with AI specialists. And we do that. I mean, we have, as I said before, we have a strategic alliance with Microsoft. We have another alliance, another strategic project with a player called Sierra. Probably you guys never heard of them, but they are probably one of the biggest players in terms of AI solutions for customer care. And today, almost 50% of the interactions we have with customers in the UK happen through an AI solution and growing. And we're partnering with smaller startups as well. We have a partnership with a Turkish startup. We have a partnership with some startups here in the UK, in Israel. So we have a really big setup of different ways of approaching AI. As I said, we're doing that online. Because we see that this is a fundamental change in the industry and we're really embracing it. But we're doing that with a lot of rigor, making sure that our investments are really always under control and they always bring value added to our consumers. So we're really focusing on that. But yeah, we're really embracing the AI opportunity because we're convinced it is not going to change. It's already changing, as I said before, this market. I don't know if that was what you were looking for, Sarah. I hope it is.

Thanks. I think, Yash, you might end up being the last question in the interest of time. So, George, go ahead.

Sure. Thanks. Thank you for taking my question, Yashar Rajani, UBS. So, the first question is, you know, if I just look at some of your competitors, whether it's the European Pure Plays or, you know, some of the UK Omnichannel players, right, there's a big dichotomy in the performance of you versus them. And I appreciate there's been some legacy issues that you've been dealing with. But now that the legacy issues are behind us, you know, who do you think you can take share from, especially given that some of these players are meaningfully larger than you, right? So that's the first question. And the second question related to that is, you know, you spoke about trying to train the models and you know actually models getting better over time uh again you know some of your competitors have bigger customer basis than you maybe they're a little bit ahead in some of that journey so do you feel like you're playing a little bit of catch up on that front and if so i mean how are you making sure that you know you're getting in line or better than them thank you yeah thanks i think jose yeah so on on our competitors uh

Well, this is probably one of the most competitive markets in the planet. And I've said that so many times that that's why it's so fragmented. So we will be taking share from a lot of them, not just from one. It's not that we're going behind one. Our consumers today buy in ASOS. They buy in a lot of these competitors you have implicitly mentioned. They are buying in other competitors you have not mentioned, like secondhand. So there is like And we are not just going after one. We are not going after the entry price point. We're going after these individuals that they are interested in fashion at a competitive price. I think our current and future consumers are pretty much everywhere. There is not one target. We're not going to take it from competitor A, B, or Z, or whatever. We're going to take it probably from most of them. And this is what we're seeing in these new consumers that we're receiving. almost every consumer buys in more than one place. It's almost impossible to find a consumer that only buys in one place. Consumers buy in different places. So it's also changing the share of wallets that they have here, here and there. On how do we train the models and if we're playing catch-up? That's quite an interesting question. When we talk to companies like Microsoft, clearly we're not playing catch-up. We're ahead of the curve. We are one of their key partners globally to do that. And it is true having a lot of information is very important. We have 16 million consumers, so we do have a lot of information. But it's not only the information you have, it's the quality of the information you have. And a lot of these competitors might not have the same quality of information. Omnichannel brands have normally less quality of information because the offline interactions are less qualitative in terms of data, I mean. And even some of the online players, they are more worried about the transaction itself. We're very worried about also the styling behind the transaction. So we have a very, very qualitative type of information about how consumers interact with different styling. And that is incredibly important for the journey we are trying to define, not for a different journey. So I think we're not playing catch up. If anything, we're ahead of the curve. And we are determined to continue being ahead of the curve.

I think if I may, just to build on that, AI for us, we feel we're uniquely positioned to capitalize on AI, not only versus the offline players, but also if you think about what Jose described around outfits and personalization, with this being a really core part of our proposition that we're going to add to full consumers, That is different to what others are doing. And the use of AI can really turbocharge that. Presenting outfits across tens of thousands of different products that we hold across multitude of different brands and being able to surface them to the consumer in a really personalized way. I think this really gives us an opportunity for us to capitalize on. And that's how we're thinking about this with our new strategy and how we can utilize AI to turbocharge.

That's us at time. Thank you, everyone, for your questions. Jose, I'll just pass over to you.

Just wanted to thank all of you for coming here, especially on a Friday. I know it's not the easiest day to come, so thank you so, so much. As we both have said, we're incredibly excited about where we are and the prospects. We are very, very excited about the signs we're getting from the market at this beginning of fiscal year 26. And we will continue with this journey to completely... finalize our journey to make ASOS the most exciting fashion destination in the planet. And I hope you guys will all witness it soon. So thank you so much. I'm looking forward to the next interaction with you guys. Thank you. Have a nice weekend.