REG - ASOS PLC - Final results for the period to 3 September 2023
01/11/2023 07:15
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RNS Number : 9478R ASOS PLC 01 November 2023
1 November 2023
ASOS plc
Global Online Fashion Destination
Final results for the period to 3 September 2023
Turnaround on-track, delivering on "Driving Change" objectives and readying
for a profitable return to growth in FY25
Summary financial results
£m(1) Period to 3 Sep Year ended 31 Aug 2022 (FY22) CCY change (adjusted, LfL)(2,3,4)
2023 (FY23) Change
Headline measures
Adjusted group revenue(5) 3,538.0 3,936.5 (11%)
Adjusted gross margin(5) 44.2% 43.6% 60bps
Adjusted EBITDA(5) 124.5 183.9 (59.4)
Adjusted EBIT(5) (29.0) 44.1 (73.1)
Adjusted EBIT margin(5) (0.8%) 1.1% (190bps)
Adjusted (loss)/profit before tax(5) (70.3) 22.0 (92.3)
Net debt(5) (319.5) (152.9) (166.6)
Free cash outflow(5,6) (213.0) (339.8) 126.8
Statutory measures
Group revenue 3,549.5 3,936.5 (10%)
Gross margin 41.1% 43.6% (250bps)
Operating Loss (248.5) (9.8) (238.7)
Loss before tax (296.7) (31.9) (264.8)
Strategic update and results summary
· FY23 in-line with guidance provided in our P4 trading update, with H2
adjusted EBIT up more than 100% year-on-year ('YoY') and FY23 free cashflow(6)
up more than £125m YoY despite double-digit revenue decline, reflecting
material improvements to core profitability and strong inventory management.
· Executed on Driving Change agenda priorities: reduced stock levels by
c.30%, increased profit per order(7) by over 30%, refinanced the balance sheet
bringing stability with the removal of profit-based covenants, and refreshed
the leadership team to bring new energy and expertise.
· Significant operational progress: 84% of the c.£1.1bn stock carried
forward cleared through in the year, stock operating under the new commercial
model in H2 delivered stronger sell-through, Test & React pilot for
high-fashion product produced c.500 options with lead times of c.two weeks,
Partner Fulfils scaled to 33 brands across six markets, and technology now in
place to accelerate the rollout and provide ASOS Fulfilment Services on Direct
to Consumer product.
· With strong foundations in place, FY24 will prioritise a shift
'Back to Fashion', leveraging ASOS' strengths to offer the best and most
relevant product, styled the ASOS way, with an exciting and seamless customer
experience geared around fashion and excitement. This will be supported by
£30m incremental investment into marketing while maintaining an obsession
with operational excellence and disciplined capital allocation.
· Final cleansing of stock over FY24 will remain a drag on sales growth
and profitability through the year. Expect to exit FY24 with majority of stock
operating on the new commercial model and inventory restored to pre-COVID
levels, Test & React scaled to over 10% of own brand, and 200% growth in
Partner Fulfils.
· Anticipate sales decline of 5% to 15% in FY24, with positive adjusted
EBITDA and material cash generation driven by stock sell-through, further
reducing net debt. In FY25, we expect to return to growth with EBITDA margin
around pre-COVID levels.
José Antonio Ramos Calamonte, Chief Executive Officer said:
"FY23 was a year of good progress for ASOS in a very challenging environment
and I am proud of what the business has achieved. We have reduced our stock
balance by c.30%, significantly improved the core profitability of the
business, strengthened our balance sheet, and refreshed our leadership team.
Encouragingly, stock that was brought in under our new commercial model over
the summer months has performed strongly and this gives us the confidence to
accelerate the rollout of our new processes. As such, we are taking decisive
action in FY24 to clear stock brought in under our old model while
substantially improving our speed to market and investing in our brand,
reminding our customers what we're really about: fashion."
CEO Review
Where were we a year ago?
In my first CEO review 12 months ago, I explained that we had more stock than
we'd like, which had eroded our profitability and destabilised our balance
sheet; and that some of our customers, brands or activities were simply
unprofitable. While external factors had amplified the situation, our focus on
growth without due consideration for the cost had contributed significantly
and our high level of stock was exacerbated by poor operating practices - we
were too slow and inefficient. We launched our Driving Change agenda, framed
internally as a two-step plan. Firstly 'Back to Basics', which involved
reducing our stock levels, transitioning to a new commercial model; improving
profitability; refreshing our leadership team with the energy and talent
required to turn things around; and refinancing our balance sheet. This first
stage was ultimately about bringing stability and laying solid foundations.
Our next step, 'Back to Fashion', is focused on regaining the hearts and minds
of our target consumer, accelerating towards our new commercial model, and
retaining a disciplined approach to profitability and cash generation.
What have we achieved over the last 12 months?
In FY23 we have refinanced our balance sheet and removed profit-based
covenants, providing the flexibility to take the right decisions in the
long-term interests of the business, and also returned to cash generation in
the second half of the year. Operationally, we comprehensively re-defined our
commercial model to align with best-in-class fashion principles: focusing on
speed and flexibility of intake with better planning; incentivising
sell-through in-season; and clearing stock as-we-go to maintain a healthier
stock profile.
We have begun to embed an intense focus on speed and operational excellence
throughout our organisation and successfully piloted our best-in-class Test
& React model for our highest fashion product, which moves from design to
site within two weeks. To increase speed and flexibility with our partner
brands, we invested in new technology infrastructure that will enable the
rollout of ASOS Fulfilment Services ('AFS') to support our stockless Direct to
Consumer ('DTC') model, Partner Fulfils. We empowered a Central Merchandise
Planning team with greater control and oversight over forecasting and managing
our stock. We sold through 84% of the £1.1bn of inventory brought forward
from FY22 (£130m or 13ppt of which was through the write-off of our oldest
stock), reduced intake levels to better align with demand, began to operate
Spring Summer ('SS') intake on the new commercial model, and ended the year
with a cleaner stock position and c.30% less stock (ahead of our c.20%
guidance).
As part of the profit focus under our Driving Change agenda, we delivered the
c.£300m of profit improvement and cost saving measures designed to mitigate
the inflationary and returns rate headwinds and improve core order
profitability by over 30%, by exiting or correcting unprofitable brands,
customers, and activities. The cost savings are particularly evident in our
outbound supply chain with distribution costs as a percentage of sales
improving by 120bps due to measures including the discontinuation of UK split
orders and favourable negotiations with carriers. We did this while bedding in
a new leadership team committed to establishing a culture of operational
excellence.
Our progress has been the result of a huge effort by ASOSers, a transformation
of our mindset, and a resilience to keep pushing when our results aren't yet
reflective of our actions. While some of these initiatives inevitably led to
lower customer acquisition and higher levels of churn, the customers that
remain are more profitable and therefore sustainable.
Where are we going?
ASOS has over 23m active customers globally, c.£3.5bn in revenues, and a
highly successful collection of own brands operating at scale. We have an
enviably strong position from which to build our future. We have churned
unprofitable brands, activities, and customers, many of the latter picked up
over the pandemic, but we remain c.30% bigger than FY19, with c.4m additional
active customers. In FY24 we will accelerate our plans to transition to our
new commercial model, prioritising near-term cash generation and the long-term
interests of the business over short-term revenue growth and profitability.
The benefits of our new model will become clearly visible in our profitability
and growth in FY25 and beyond.
While fashion has always been a fiercely competitive industry, I am very clear
on what makes ASOS unique and why we have the right to win market share with a
profitable and cash generative model. ASOS is structurally set up to win again
by putting speed at the heart of its culture and operations. By obsessively
focusing on cultivating our strengths, we can offer an exciting proposition to
consumers while also generating attractive returns for our shareholders. This
stems from five strategic priorities:
1. Best & most relevant product
We must offer our customers the best assortment - the most exciting fashion
from the most relevant brands for fashion-loving 20-somethings, perfectly
blended with a set of our own unique brands that can only be found at ASOS.
Our own brands are already a key differentiator, with more than two-thirds of
our global customer base having purchased an own brand item in the last twelve
months, and they are a great customer acquisition tool, with 55% of new
customer orders containing an own brand product. The combination of exclusive
and relevant own brands with the curation of the most exciting and additive
product from partner brands is our critical competitive advantage. This is
where we must strive for leadership, invest our energy, and focus our
innovation. As a pure-play online retailer, without the volume demands of
stocking a global store estate, we can move faster with less risk, but we have
not been maximising this competitive advantage. We will move faster in
everything we do, work more closely with our brand partners, and obsess over
bringing the most relevant fashion product to consumers.
2. Destination for style
ASOS is the only place where brands can show their potential in a perfectly
blended fashion context, and the only place where consumers can experience
their favourite brands with our differentiated visual language, creating an
inspirational, rather than transactional, customer experience. This is a core
competitive advantage and where we must continue to differentiate. Our
in-house studio shoots all our product, creating a distinct visual identity.
This not only drives better engagement with our customers but is critical to
our relationships with brand partners, who see a huge opportunity to reach a
different customer segment than is often their core. This approach is not new:
it has always been a core part of the ASOS proposition. But we will make
improvements to our customer experience to translate this critical
differentiator more directly into economic benefits.
3. A customer journey created around fashion and excitement
Our target market is fashion-loving 20-somethings. This tightly-defined market
segment means we can authentically offer our customers an exciting, engaging,
and relevant fashion experience, connecting with them at the earliest stage of
their fashion journey and providing inspiration, not just a transaction. Their
fashion journey does not begin with performance marketing and promotions - by
relying on these activities to drive sales, we can miss the key stages in a
customer's journey and risk losing them to peers. Our ability to inspire is a
significant competitive advantage, but we must bring that to life for our
customers however we engage with them. As we improve our product and
double-down on our unique style, we must reignite our brand heat and remind
consumers we are first and foremost about fashion, not convenience or
discounting. It is our ambition to restore our share of voice and show up at
every stage in the customer journey - from discovery to purchase through to
loyalty and advocacy. We will build stronger relationships with our best
customers and turn them into advocates for our brand.
4. Competitive convenience
Convenience remains a key reason to shop online and we do not overlook its
role in our future growth, but we will not look to convenience as a core
differentiator. We must always offer a seamless experience, easy to shop, with
a competitive delivery proposition, returns policy, and methods of payment. We
keep ourselves at the level of our best competitors in this area and will be a
fast follower of innovation. We made changes to our proposition over the last
year to reflect this, yet we continue to offer delivery within two days to 95%
of our customers globally. We also go beyond many peers in our commitment to
free returns in core geographies. In some geographies, we have recently
introduced paid returns after 14 days, encouraging quicker returns and
increasing the likelihood of the product being resold at full price, thus
aligning the incentives of our customers with our own interests. We will
constantly reassess whether we are investing into the areas that matter most
to our customers.
5. Disciplined capital allocation
Our unique value proposition has a flywheel effect on our financials,
supporting higher average basket value, stronger full price sell-through,
lower returns rates, reduced churn, and faster stock turn, ultimately
improving our profitability and cash generation and providing the resources to
drive our growth. This is underpinned by operational excellence and efficient
capital allocation, allowing us to invest behind our strengths in a
disciplined way, relentlessly removing waste to invest into opportunity. We
remain committed to our international model, with every region making a
positive variable profit contribution in FY23, and we see long-term growth
potential in all our core markets. Our core markets (UK, Germany, France, US),
are already - or have the potential to be - large and profitable. Accordingly,
we will invest our resources significantly into these markets, with dedicated
marketing, localised assortment and a best-in-class convenience proposition
supported by local infrastructure (i.e., distribution centres). Outside of our
core markets, we will typically use central marketing and assortment, leverage
adjacent infrastructure, and consider wholesale of our own brand to build
brand awareness and supplement our scale. We will constantly reassess the
classification of our markets and adapt our approach where necessary to
maximise the return on our investment over the mid-term.
Priorities for the year ahead
In FY24 we will focus on delivering three things to develop our competitive
advantage:
1. More relevant product through disciplined stock management and
an obsession with speed
Managing our stock to optimise value creation
We have significantly intensified our focus on stock management as a critical
enabler of our plan to bring the newest and most compelling assortment to our
customers. Optimising our stock position and fully transitioning to our new
commercial model requires three elements:
(i) Eliminating old stock, turning it into cash:
From FY18 to FY22, our stock levels doubled and so too did our discounts,
significantly eroding our gross margin and with it our profitability. While
external factors amplified the situation, our stock build-up really was driven
by poor operating practices - we were too slow and inefficient and held stock
for too long, believing we had limitless "shelf space" and in the knowledge
that we could eventually sell the stock profitably. We have made good progress
over the last 12 months, clearing 84% of the £1.1bn of stock carried forward
into the year, £130m of which was through a write-off of our oldest stock and
clearance off-site. We reduced total inventory by 30%, ahead of the c.20%
guided at the beginning of the year. But we must finish the job over the
course of the coming months. Over FY24, we will clear the remaining c.16% of
FY22 stock left over, together with that carried forward from FY23. Our
remaining FY23 stock relates predominantly to the Autumn Winter ('AW') season,
for which intake was ordered under our old commercial model.
(ii) A more disciplined, flexible stock purchasing model:
We must also increase the accuracy and flexibility of our purchasing to
improve the quality of available product and reduce older stock carried
forward in the future. We have put in place more rigorous planning of stock
purchasing, with oversight from a central merchandising team, and we are
significantly increasing our speed to market and the flexibility of our
intake. By reducing the time from design to site, we have better data to
support our purchasing decisions. For our highest fashion product developed
under our Test & React model, we can test the demand for a product before
committing in significant depth. For our partner brands, we are rolling out
Partner Fulfils and AFS alongside our wholesale model to increase flexibility
for both parties and maximise the availability of the most exciting product
while balancing inventory risk. Given the more than 6-month average lead time
on product, orders for AW22 were placed before the rollout of our new strategy
and as such, intake remained high over H1 FY23. We were able to adapt intake
for SS23 but mainly by reducing width, not depth, which negatively impacted
sales over H2 FY23. As we move through FY24 we will benefit from cleaner
intake with reduced depth, more accurately reflecting expected stock turn
under our new commercial model. Through FY25 we will increasingly benefit from
our improving speed and flexibility.
(iii) In-season stock management:
Under our new commercial model, we manage our high-fashion stock in-season, to
guarantee that we reach the end of the season with the minimum level of stock
unsold, and hence our future operations will not be "polluted" with old stock.
This releases cash to invest in new stock, removes detractors from the site,
and creates space for newness. This is supported by: improvements to our
sourcing, enabling investment into the price and quality of our product; our
more disciplined and flexible purchasing (above); and increased fashion-led
marketing to drive the right traffic to our site. We will tackle
non-performing stock immediately, which leads to a better realised price as
discounting closer to the season requires shallower markdown. Ultimately, we
focus on new, in-season, full-price product and underscore our value as a
reliable source of fashion. This benefits both customers and the partner
brands on our platform, creating a virtuous cycle of better relationships with
more relevant brands and access to better product. That is precisely what we
started to do in SS23. The average age of stock in our October mid-season sale
is just 13 weeks, compared to 44 weeks in FY22. This reflects both our
progress on clearing through older stock in the last twelve months, as well as
our new approach of clearing high-fashion stock close to the end of the
season, thus reducing the amount of product carried forward to SS24.
Obsession with speed
Our obsession with speed is key to unlocking more relevant product across both
our own brands and our partner brands. Through our very successful pilot, we
have now launched c.500 Test & React options going from design to site in
around two weeks. To date, we have seen this stock turning three times quicker
than our business-as-usual own brand product despite engaging in no
promotional activity, while generating a gross margin several percentage
points higher than our own brand average. Promisingly, the Test & React
options launched to date are resonating particularly strongly with our
youngest customers and getting substantial organic influencer pick-up on
social media. At present, Test & React makes up less than 1% of own brand
sales but scaling this up to over 10% of own brand by the end of FY24 and
c.30% in the medium term will bring more exciting product, have a meaningful
impact on our gross margin, and support a cleaner stock profile.
Test & React vs. BAU
Average cover c.6 weeks shorter
Average discount depth 15ppts shallower
Gross basket value >£50 higher
Average customer age 2.5 years younger
Our refreshed commercial leadership team will also bring new ways of working
with our brand partners, further strengthening relationships with strategic
brands, collaborating on product and marketing campaigns, sharing data and
insights, and strengthening our back-end processes to accelerate on-boarding
of new product and new brands. Our flexible fulfilment model, encompassing
Partner Fulfils and AFS, is an important tool, giving access to both
additional product and better availability from highly relevant brands. Over
the course of FY23, we have scaled our Partner Fulfils offer to 33 brands in
six markets and invested in our technology and team to support twice the
number of brands in double the number of markets in FY24 as well as launching
AFS.
Better sourcing
We will also offer better, more relevant product by improving our sourcing.
Simply by sourcing from the right locations, simplifying our processes, and
consolidating our supplier base we see a 2 to 3ppt intake margin opportunity
over the mid-term, which brings benefits not just in terms of own brand
pricing, but also quality, speed, and corporate responsibility standards in
our supply chain. In H2 FY23 we have already achieved a c.2 ppt YoY increase
in intake margin on ASOS Design Womenswear, where our changes are furthest
progressed. This has enabled investment into lower prices, ensuring our
own-brand product is competitive both in terms of price and quality.
2. Strengthen our relationship with consumers
ASOS pioneered the use of cultural marketing, content marketing and organic
social media to build engagement and relevance with young fashion lovers. In
recent years, exacerbated by our stock build-up, ASOS customer experience and
engagement has too often centred around discounting or convenience, not
fashion and brand storytelling. Over time, ASOS has become overly focused on
promotion and performance marketing and we must re-focus on building higher
quality customer engagement centred around fashion inspiration and excitement.
Customers will love ASOS because we have the best and most relevant product,
because we are a destination for style, because we offer a customer experience
geared around fashion and excitement and, but not only, because of the
convenience of our offer. We must bring that to life in our communication, in
our products, and in all our experiences. We will do this by re-igniting our
brand, growing appeal amongst our target audience by being present with our
fashion message in the earlier stages of the customer journey, and by focusing
every interaction with our customers on fashion.
In FY24, we will invest a greater proportion of our marketing budget into
re-igniting our brand, making ASOS famous for fashion again. This will include
a £30m incremental investment focusing on the UK market. We will iterate our
plans throughout the year as we understand what resonates most with our target
customer. Starting in November, we will:
i) Launch a UK brand marketing campaign, "ASOS Your Way," giving
the consumer a richer sense of what ASOS stands for, collaborating with
crowd-sourced creators, with 40 million impressions within 12 days.
ii) Run experiential guerrilla marketing activities on a regular
pulse including the launch of a London pop-up in November.
iii) Build an always-on influencer programme spanning micro to mega
influencers with a combined reach of over 50 million, with the aim of
increasing our earned media value (the equivalent value of media a brand
receives from creators without paying).
iv) Develop ambassador relationships, working with those ambassadors and
collaborators who will authentically strengthen our credentials as a
destination for style.
v) Significantly enhance our social media presence.
The benefits of brand marketing are lagging. Within 3-6 months we expect to
see greater share of voice on social and increased brand search and over H2,
we will start to see increased visits, improved conversion, new active
customers, greater order frequency, and a halo effect of stronger returns on
performance marketing.
In FY23, customer churn has increased, in part due to actions we have taken to
improve the core profitability of the business, including changes designed to
improve the behaviours of some of our least profitable customers. Overall,
these changes have been successful: profit per order increased by
approximately one-third. In some cases, these changes have resulted in us
losing very unprofitable customers whose behaviours we are unable to improve,
which is an accepted part of the strategy. However, some of our country-level
profitability initiatives will have inadvertently caused us to churn higher
quality, or 'not-yet-profitable' customers, and our approach in FY24 and
beyond must be to better connect with our most fashion-engaged customers, thus
improving retention.
Our retention strategy includes elements such as improved customer experience,
customer care, and personalisation of customer communications. Premier is also
a critical tool for improving the customer experience of our most loyal and
most valuable customers, driving an increase in UK average customer value of
c.75% compared to the rest of our base. At present, our Premier offer is
focused on an enhanced delivery proposition, but there is a significant
opportunity to enrich our offer, driving lifetime value and preventing early
churn amongst our highest quality customers. We will reinvigorate Premier to
increase its appeal based on fashion rather than just convenience, including
for example exclusive access to events (including the upcoming London pop-up),
early access to promotions, and free gifts including Face & Body samples.
3. We will reduce our costs to serve, remove waste and improve our
use of data
While we begin to look again towards growth, we will retain our focus on
operational excellence, simplifying all our processes and removing wasted time
and cost to reinvest into productive commercial activities. One aspect of this
is better prioritisation, ensuring we are allocating resource to projects that
will generate a return. As such this FY24 priority is as much about saying
'no' as it is improving the way we operate.
Under our new commercial model, we will operate with less stock going forward.
Having already reduced stock levels by c.30% over the last 12 months, we have
a further c.16% reduction planned for FY24. In this context, post the
year-end, we have reviewed our capacity requirements and started a process to
mothball our second UK fulfilment centre in Lichfield in late FY24 following
the completion of our automation work. The decision to open and automate
Lichfield was taken in 2019 without the ability to break the contract.
Mothballing the site provides an annual cost saving of c.£20m and provides
the flexibility to either sell the facility or re-open it, depending on our
capacity needs (see note 17 for further details).
A key focus area for waste in FY24 is returns. While we continue to believe
that free returns are a core part of our customer proposition, there are good
returns and bad returns. Good returns help acquire new customers, increase
basket size, and are an integral part of a profitable customer lifetime. Bad
returns are from unprofitable customers, serial returners, or for an
unnecessary cause - for example, poor quality or inaccurate sizing. We will
constantly strive to eliminate bad returns through: closer scrutiny of returns
data to identify high returning products, brands, or materials; corrective
action to improve the size, fit, and quality of our products; and AI
forecasting to drive better decision-making.
Our culture of operational excellence will be aided by increased access to an
improved use of data throughout our organisation and we continue to innovate
in this area. We continue to develop our data science and machine learning
capabilities which we deploy both across our business areas and to improve the
customer experience. In addition, this year we have started to explore how
generative AI can support our business - we have early access to Microsoft's
AI and Copilot capabilities. Having already rolled out GitHub Copilot to
support software engineering, we will soon be piloting 300 business users with
Microsoft 365 Copilot which will support our internal productivity. We are
also collaborating with Microsoft on developing use cases for generative AI.
Outlook & guidance
Over FY23, we improved our core profitability, delivering c.£300m of benefits
under the Driving Change agenda; made good progress on improving our stock
profile; gained confidence in our operational initiatives including our new
commercial model, Test & React, and Partner Fulfils; and laid strong
foundations for the years ahead.
Our mid-term priorities are leveraging our strengths: to offer the best &
most relevant product; be a destination for style; build a customer journey
created around fashion and excitement; and offer competitive convenience.
These things will drive our economic model, delivering stronger order
economics and delivering better customer lifetime value.
In FY25 we expect to deliver revenue growth and return EBITDA margin to around
pre-COVID levels (c.6%). In the medium-term we have confidence in our ability
to return to double-digit growth; steadily improve gross margin back towards
c.50%; maintain EBITDA sustainably ahead of capex, interest, tax, and leases;
reduce capex to 3-4% of sales; and deliver inventory of c.100 days.
FY24 is about taking the necessary action to get us to that path. We expect
the annualisation of Driving Change agenda profit initiatives to broadly
mitigate the impacts of fixed cost deleverage from our expected revenue
decline.
However, our priorities of accelerating towards our new commercial model and
strengthening our relationship with consumers require investment in the near
term. These investments are twofold:
i) Incremental marketing investment of c.£30m (c.1% increase in our
operating cost ratio) into re-igniting our brand, making ASOS famous for
fashion again.
ii) The discounting of stock carried forward to exit the year with a
clean stock position. We may use off-site clearance channels, sacrificing
margin to limit cannibalisation.
As such, our expectations for FY24 are:
o Sales decline of 5 to 15%, with P4 FY23 trends (i.e., high double-digit
declines) continuing through the first half of FY24 and a return to growth in
the final quarter of FY24.
o Adjusted EBITDA positive.
o Stock back to pre-COVID levels (c.£600m as previously communicated).
o Capex of c.£130m.
o Positive cash generation, reducing our net debt position.
The mothball of our second UK fulfilment centre in Lichfield will result in
the remaining £45m automation spend, usually classified as capital
expenditure, being recorded as an adjusting item in the FY24 income statement.
ASOS has ended FY23 a smaller but more resilient business and remains one of
the leading players in online 20-something fashion. While the market has
evolved and our model has adapted accordingly, we mustn't lose sight of our
core purpose. Our strength in the past came from our relentless focus on
bringing the most exciting fashion to consumers with a focus on inspiration
and style. By doubling down on that winning formula and evolving our culture
to place speed at the heart of everything we do, we can win again.
ASOS will next update the market with a post-close H1 trading update in March
2023, followed by a full H1 results update in April 2023.
José Antonio Ramos Calamonte
Chief Executive Officer
Notes
(1) All numbers subject to rounding throughout this document.
(2) Constant currency is calculated to take account of hedged rate movements
on hedged sales and spot rate movements on unhedged sales.
(3) Calculation of metrics, or movements in metrics, on an ex-Russia basis
involves the removal of Russia from FY22 performance. This adjustment allows
YoY comparisons to be made on a like-for-like basis following the decision to
suspend trade in Russia on 2 March 2022. The exception to this is visits,
where ASOS has also excluded any visits from Russia in FY23, in addition to
FY22.
(4) Like-for-like sales are adjusted to remove the benefit of the additional
three days of trading in P4 FY23 (1 June to 3 September 2023) vs. P4 FY22 (1
June to 31 August 2022) and the additional three days of trading in FY23 (1
September 2022 to 3 September 2023) vs. FY22 (1 September 2021 to 31 August
2023). The impact of the additional days is c.3% at group level in P4 FY23 and
c.1% in FY23.
(5) The alternative performance measures used by ASOS are explained and
defined and reconciled to statutory measures on page 38-40.
(6) Free cash flow is net cash generated from operating activities, less
payments to acquire intangible and tangible assets, payment of the principal
portion of lease liabilities and net finance expenses.
(7) Profit per order is calculated as variable contribution divided by billed
orders.
Financial review
All revenue growth figures are stated at constant currency ('CCY') throughout
this document unless otherwise indicated.
Period to 3 September 2023
UK EU US RoW(1) Total reported Adjusting items(2) Total adjusted
£m £m £m £m £m £m £m
Retail sales(3) 1,494.6 1,127.3 443.6 322.7 3,388.2 (11.5) 3,376.7
Revenue from other services(4) 59.8 29.4 57.5 14.6 161.3 - 161.3
Total revenue 1,554.4 1,156.7 501.1 337.3 3,549.5 (11.5) 3,538.0
Cost of sales (2,090.5) 115.9 (1,974.6)
Gross profit 1,459.0 104.4 1,563.4
Distribution expenses (429.7) - (429.7)
Administrative expenses (1,279.8) 115.1 (1,164.7)
Other income 2.0 - 2.0
Operating loss (248.5) 219.5 (29.0)
Finance income 5.0 - 5.0
Finance expense (53.2) 6.9 (46.3)
Loss before tax (296.7) 226.4 (70.3)
Overview
ASOS realised an adjusted loss before tax of £70.3m, reflecting a challenging
market backdrop characterised by weak consumer sentiment and high inflation;
alongside delivery of the Driving Change agenda, which included wide-ranging
actions to improve the business's profitability and increased financing costs,
including those associated with the refinancing announced in May 2023. Within
this, profitability improved substantially in the second half of the year as
the initiatives under the Driving Change agenda began to yield benefits and
the impact of an increasing returns rate first seen in May 2022 was
annualised.
The reported loss before tax of £296.7m includes the impact of adjusting
items totalling £226.4m. These included the stock-write off programme
announced at the start of the year (£133.2m), property related costs
resulting from a reduction in the business's head office and warehouse
footprint (£60.7m) and consultancy and restructuring costs (£31.0m), as well
as amortisation relating to the Topshop brands (£10.7m) and immaterial items
relating to prior years £9.2m. The total cash outflow relating to adjusting
items in the period was £53.4m of which £30.8m related to refinancing fees.
Further detail on each of these items can be found in note 3 on pages 25-28.
To simplify our processes and make our reporting more efficient we have
aligned our internal and external reporting periods. Previously our external
reporting was on a twelve-month basis from 1 September to 31 August, whereas
internally the weekly nature of our trading is captured in either a 52-week or
53-week year. As such, FY23 ran from 1 September 2022 to 3 September 2023 and
therefore included an additional three trading days compared to FY22 (1
September 2021 to 31 August 2022). The impact of this on group sales growth
was c.1% for FY23 and c.3% for P4 (1 June 2023 to 3 September 2023), with
like-for-like sales growth disclosed in the P4 Trading Statement issued on 26
September 2023. The associated profit and cash flow impact was immaterial.
FY24 will be a 52-week period to 1 September 2024.
Revenue
FY23 total sales declined by -11%(5) (-10% on a reported basis) year-on-year
('YoY'), with the decline accelerating to -15% (-12% on a reported basis) in
the second half of the year from -7% (-8% reported) in the first half.
Across the year the group's top-line sales performance has been impacted by a
combination of market and company-specific factors. From a market perspective,
there have been three major headwinds: weak consumer sentiment based on
cost-of-living concerns; the apparel market underperforming relative to total
retail; and gains in online penetration during the pandemic reverting to a
more normalised long-term trajectory as consumers return to stores. All these
headwinds have particularly impacted younger consumers.(6)
The second half of the year was also more affected by deliberate profitability
actions taken under the Driving Change agenda, which were introduced from
January onwards, as well as a trough in new, fashion-led product entering the
business during July and August as action taken to reduce intake coincided
with usual seasonal factors.
KPIs excluding Russia(7) Period to 3 September 2023 Year ended 31 August 2022 Change
Active customers(8) (m) 23.3 25.7 (9%)
Average basket value(9) £40.33 £37.59 7%
Average basket value CCY(10) £39.65 £37.59 5%
Average order frequency(11) 3.59 3.83 (6%)
Total shipped orders (m) 83.7 98.3 (15%)
Total visits (m) 2,661.3 2,896.2 (8%)
Conversion(12) 3.1% 3.4% (30bps)
Active customers declined -9% YoY as we continued to churn lower quality
customers acquired during the pandemic and employed more discipline in our
marketing approach in response to weaker demand. Our profitability actions
also included remedial action to improve profitability among loss-making
customer segments, driving higher levels of churn. Premier customers declined
-11% YoY, reflecting increases to subscription prices and the introduction or
increase of minimum order thresholds for free delivery. Average basket value
('ABV') increased by 5%, as pricing increases more than offset the markdown
investment used to clear aged inventory. Accordingly, profit per order is over
30% higher(13).
Both visits and conversion stepped back YoY, as customers made more considered
purchases.
Performance by market
UK
UK KPIs Period to 3 September 2023
Total Sales -12% (-13% LfL)
Visits -10%
Orders -17%
Conversion -40bps
ABV +5%
Active Customers 8.1m (-9%)
Sales in the UK declined by -13% against a difficult consumer backdrop
characterised by high inflation and weak sentiment, particularly among the
younger ASOS demographic(6), and deteriorated further in the summer months as
challenging weather conditions impacted the wider apparel sector. These
factors favoured lower price points and resulted in aggressive discounting in
the market as competitors acted to clear excess inventory. The step up in
online penetration witnessed during the pandemic continued to reverse, albeit
remaining above pre-pandemic levels(14).
Sales in the period were also impacted by planned profitability actions,
including a demand-based approach to deploying marketing spend, pricing
changes and fine-tuning the delivery proposition. The price of a Premier
subscription was increased in November 2022 but subsequently reversed in May
2023 due to a larger than expected impact on Premier sign-ups. Active
customers in the UK were down -9%, also reflecting market conditions as well
as measures taken by the business to improve its profitability. These included
initiatives designed to minimise the impact of loss-making customers which in
some instances resulted in elevated (but intentional) churn, including of
certain Premier customer segments.
An increase in average selling price ('ASP') underpinned an ABV increase of 5%
to partially offset the impact of fewer orders (-17%), which may also reflect
proposition changes designed to encourage our customers to consolidate
purchases into fewer, larger orders and hence minimise delivery and returns
processing costs. Meanwhile visits (-10%) and conversion (-40bps) reflect more
considered purchasing behaviour in a cost-of-living crisis alongside restraint
on marketing spend in a weak demand environment.
EU
EU KPIs Period to 3 September 2023
Total Sales -1% (-4% CCY)
Visits -6%
Orders -9%
Conversion -10bps
ABV +9%
ABV (CCY) +7%
Active Customers 10.1m (-7%)
Sales in the EU were more resilient than other regions, down -4% CCY as ABV
growth (7% CCY) partially offset lower order volumes (-9%). In addition to
price increases, ABV benefitted from a stronger performance in AW categories
(which are higher ASP) relative to SS. As in the UK, visits and conversion
were both back (-6% and -10bps respectively) due to a combination of business
specific and market factors.
On a country level, the Netherlands and Southern Europe continued to
outperform while Scandinavia and Rest of Europe countries were weaker in
response to the more aggressive profitability measures being implemented. Our
core European geographies of France and Germany traded below the EU average
but broadly in line with the local markets.
US
US KPIs Period to 3 September 2023
Total Sales -6% (-14% CCY)
Visits -5%
Orders -17%
Conversion -40bps
ABV +13%
ABV (CCY) +4%
Active Customers 2.9m (-12%)
Total US sales fell by -14% CCY, reflecting challenges in visits (-5%) and
conversion (-40bps), with all three metrics deteriorating in response to
wide-ranging actions to improve the region's profitability from January
onwards. A -17% decline in orders was not offset by the 4% CCY increase in
ABV, and active customers were also back -12% reflecting discipline on paid
media spend in a weaker demand environment. Wholesale performed well relative
to the rest of the segment.
Rest of World
RoW KPIs Period to 3 September 2023 excluding Russia(7) Period to 3 September 2023 including Russia
Total Sales -15% (-16% CCY) -29% (-30% CCY)
Visits -15% -37%
Orders -23% -38%
Conversion -20bps Flat
ABV +11% +14%
ABV (CCY) +10% +12%
Active Customers 2.2m (-17%) 2.2m (-35%)
Rest of World ('RoW') sales fell by -16% CCY and excluding Russia from the
base period, reflecting widespread profitability measures outside our core
geographies from January onwards. As in other regions, RoW was impacted by
price increases and changes to the delivery proposition including price
increases and changes to thresholds, resulting in higher ABV (10% CCY) but
fewer orders (-23%), with active customers (-17%), visits (-15%) and
conversion (-20bps) back as marketing investment was rebased. From a country
perspective, Middle East and North Africa ('MENA') performed well while
Australia and Asia Pacific ('APAC') were more challenging.
Gross margin
Adjusted gross margin(2) rose 60bps YoY to 44.2% with margin expansion in the
second half of the year largely driven by pricing and freight but partially
offset by trading activity including higher levels of discounting as the
clearance of older inventory was prioritised in a promotional apparel market
during the final months of the year.
Reported gross margin was 41.1% (-250bps YoY), with the key difference versus
adjusted gross margin being the impact of the stock write-off programme of
£118.5m(2) announced to facilitate the transition to the new commercial
operating model alongside FY22 results.
Operating expenses
£m Period to 3 September 2023 % of sales Year ended 31 August 2022 % of sales Change in £ value
Distribution costs (429.7) 12.1%(15) (523.7) 13.3% 18%
Warehousing (416.4) 11.8%(15) (427.0) 10.8% 2%
Marketing (195.0) 5.5%(15) (223.5) 5.7% 13%
Other operating costs (400.4) 11.3%(15) (380.7) 9.7% (5%)
Depreciation and amortisation (152.9) 4.3%(15) (139.1) 3.5% (10%)
Total operating costs (excl. adjusting items) (1,594.4) 45.1%(15) (1,694.0) 43.0% 6%
Adjusting items(2) (115.1) 3.2% (53.9) 1.4% (114%)
Total operating costs (1,709.5) 48.1% (1,747.9) 44.4% 2%
Total operating costs excluding adjusting items decreased by -6% YoY, with an
18% reduction in distribution costs and a 13% fall in marketing spend
contributing to the improvement. However, the deleverage resulting from
reduced volume caused adjusted operating costs as a percentage of sales to
increase by 210bps despite strong control of fixed costs.
Distribution costs at 12.1% of sales decreased by 120bps YoY as the impact of
stronger basket economics, simplification of our network and successful
supplier negotiations offset higher fuel charges. The reduced number of orders
in the year (-15%) resulted in lower outbound delivery costs. Cost saving
measures under the Driving Change agenda included the simplification of our UK
network through the discontinuation of "split orders", fulfilling individual
customer orders from one stock pool and negating double carrier costs. Rate
negotiations with certain regional suppliers combined with a scaling back of
our delivery proposition in some markets reduced distribution cost per parcel.
These benefits have more than offset the headwinds from higher fuel charges.
Warehouse costs as a percentage of sales increased by 100bps YoY to 11.8% due
to inflation across labour, consumables, and utilities in all fulfilment
centres. This increase was weighted to the first half the year (+210bps to
12.4% in H1), as higher stock levels caused inefficiencies in our warehouses
at the start of FY23. As inventory reduced in the second half of the year,
ancillary and offsite storage locations were closed while changes were made to
simplify our UK returns network and drive improvements in pick and pack
efficiency. As a result, warehouse costs were 30bps lower YoY in H2.
Marketing costs decreased by 13% YoY and fell 20bps to 5.5% of sales as spend
on performance marketing was optimised to deliver the greatest return on
investment. This included a more dynamic approach, scaling back marketing
spend in response to softer demand and instead investing in discounting to
drive sales in a highly promotional market. Spend was optimised within
different channels and geographies generating efficiencies, which helped to
offset some of the elevated customer acquisition costs experienced in H1.
Other operating costs increased 160bps YoY as a percentage of sales (excluding
adjusting items). The annualised payroll cost at the start of the year was
much higher than the average for FY22 as the annual pay rise compounded higher
entry headcount, in part due to new headcount added across FY22 and a higher
level of vacancies in FY22. This was partly mitigated by headcount reduction
and tighter control of vacancies through the year, such that by the end of the
financial year headcount was on average 11% lower YoY. Contractual increases
in third party technology services and overhead costs (including electricity,
insurance, rates, and waste management costs) have also contributed to the
overall increase, however these have been partly offset by rationalisation
across our central cost base as part of the Driving Change agenda.
Across the P&L, and in line with targets that were set earlier in the
year, profit improvement and cost mitigation measures have delivered c.£300m
of benefits in FY23, mitigating headwinds from inflation and an increasing
returns rate. These include the pricing increases and sourcing improvements
that have impacted gross profit, as well as actions taken to rationalise the
supply chain network and reduce overhead costs. Initiatives were also launched
to minimise the impact of unprofitable geographies, customers, and brands on
our platform, including reversing historical over-investment in our
convenience proposition, changing the way we service specific customer
segments, and refining our approach to branded promotion. These changes have
initially reduced customer numbers and sales, but ultimately support ASOS'
ambition to deliver sustainably profitable and cash generative growth in the
medium-term.
Depreciation and amortisation costs (excluding adjusting items) as a
percentage of sales increased by 80bps YoY. The increase in depreciation and
amortisation relates to growth in intangible assets including data services,
operations systems and improvements to web and payments platforms.
Interest
ASOS incurred a finance expense (excluding adjusting items) of £46.3m
compared to £23.0m in FY22. This reflected an increase in the level of drawn
borrowings, rising interest rates (SONIA at 5.2% at the end of the year from
1.7% at the start) and a higher margin payable post the May 2023 refinancing
(see Net Debt, Refinancing and Liquidity section below).
Fees in relation to the covenant waiver, either ineligible for capitalisation
or written off once the Revolving Credit Facility ('RCF') was replaced by the
new Bantry Bay Capital Limited ('Bantry Bay') refinancing, have been treated
as adjusting items.
Finance income of £5.0m includes interest earned on deposits at financial
institutions. A higher level of return in FY23 compared to the £0.9m in FY22
reflected a higher average cash balance and a rising global interest rate
environment.
Taxation
The reported effective tax rate is 24.8% based on the reported loss before tax
of £296.7m. This loss creates a deferred tax asset, recognised at 25%. This
is broadly in line with the HY23 effective tax rate of 25%.
Earnings per share
Both basic and diluted loss per share were 213.0p (FY22: basic and diluted
loss per share of 30.9p). The higher loss was a function of a higher reported
loss before tax of £296.7m (FY22: £31.9m last year) partially offset by more
shares in issue following the equity raise in May 2023. The potentially
convertible shares related to both the convertible bond and ASOS' employee
share schemes have been excluded from the calculation of diluted loss per
share as they are anti-dilutive for the period ended 3 September 2023.
Free cash flow
£m Period to 3 September 2023 Year ended 31 August 2022
Operating cash flow 16.4 (120.4)
Purchase of property, plant & equipment and intangible assets (177.9) (182.9)
Payment of lease liabilities (principal) (22.4) (26.3)
Interest received 4.5 0.9
Interest paid (33.6) (11.1)
Free cash flow (before financing) (213.0) (339.8)
Issuance of equity 77.6 -
Proceeds from borrowings 200.0 -
Repayment of borrowings (1.7) -
Refinancing fees (30.8) -
Cash flow 32.1 (339.8)
There was a free cash outflow(16) (before items relating to financing) of
£213.0m for the year, including a cash inflow of £45.8m in H2 FY23 after a
£258.8m outflow in the first half of the year.
The inflow from adjusted EBITDA of £124.5m and closing inventory being
£180.4m lower year-on-year (excluding the impact of the one-off stock
write-off) was more than offset by adverse working capital movements due to a
decrease in trade and other payables. This was largely due to lower intake
receipts and operating costs in the second half of the year.
Cash was also used to fund a capital investment of £177.9m, including
committed spend in relation to the delayed automation projects in Lichfield
and Atlanta, and technology projects including in support of the Partner
Fulfils expansion. Finally, interest and refinancing costs increased due to
the drawdown of the group's previous RCF in September 2022 (the 'Old RCF') and
the utilisation of the £200m term loan from Bantry Bay ('Term Loan') during
the year, with a small offset from interest income as surplus cash was
invested as interest rates increased.
Refinancing fees in the year totalled £30.8m relating firstly to a waiver of
the covenants applicable to the Old RCF in October 2022, then the subsequent
amendment and extension of the Old RCF in May 2023 (prior to announcement of
the Bantry Bay refinancing). Together with interest payable on the new
refinancing of £8.0m, consultancy spend of £1.2m and the accelerated payment
of interest on the Old RCF, the incremental cash cost of refinancing in the
year was £45.5m.
Net debt, Refinancing and Liquidity
£m Period to 3 September 2023 Year ended 31 August 2022
Convertible bond (fair value of debt component) 464.4 451.0
Term loan 184.8 -
Nordstrom loan 20.4 22.0
Put option liability 3.2 2.9
Borrowings 672.8 475.9
Cash & cash equivalents (353.3) (323.0)
Net debt (excluding lease liabilities) 319.5 152.9
Excluding lease liabilities, the business started the year with borrowings of
£475.9m and net debt of £152.9m after cash and cash equivalents of £323.0m.
On 8 September 2022, £250m was drawn under the £350m Old RCF. Following the
May 2023 refinancing with specialist lender Bantry Bay the Old RCF was repaid
in full using the new Term Loan with the balance funded from the proceeds from
the issuance of equity. The Term Loan is stated net of directly attributable
unamortised refinancing costs.
Cash and undrawn facilities totalled £428.3m at year-end (FY22: £673.0m) and
included cash and cash equivalents of £353.3m (FY22: £323.0m) and the
undrawn new RCF provided as part of the Bantry Bay refinancing of £75.0m
(FY22: undrawn Old RCF of £350.0m).
Sean Glithero
Interim Chief Financial Officer
Notes
(1) Rest of World
(2) The adjusting items and the alternative performance measures used by ASOS
are explained and defined in note 3 and on pages 38-40 respectively.
(3) Retail sales are internet sales recorded net of an appropriate deduction
for actual and expected returns, relevant vouchers, discounts and sales taxes.
(4) Income from other services comprises of delivery receipt payments,
marketing services, commission on partner-fulfilled sales and revenue from
wholesale sales.
(5) Total adjusted sales, on a CCY basis, excluding Russia from H1 FY22, and
removing the impact of the 3 extra trading days in FY23.
(6) Kantar Total Market | Spend YoY % Change | Online | Total Adultwear | 24
& 52 w/e 20th August 2023 vs LY
(7) Calculation of metrics, or movements in metrics, on an ex-Russia basis
involves the removal of Russia from FY22 performance. This adjustment allows
YoY comparisons to be made on a like-for-like basis following the decision to
suspend trade in Russia on 2 March 2022. The exception to this is visits,
where ASOS have also excluded any visits from Russia in FY23, in addition to
FY22.
(8) Active customers defined as having shopped in the last 12 financial
months.
(9) Average basket value is defined as adjusted net retail sales divided by
shipped orders.
(10) Average basket value CCY is calculated as adjusted constant currency net
retail sales divided by shipped orders.
(11) Average order frequency is calculated as total shipped orders divided by
active customers.
(12) Conversion is calculated as total shipped orders divided by total visits.
(13) Profit per order is calculated as variable contribution divided by billed
orders.
(14) BRC-KPMG Retail Sales Monitor for August 2023.
(15) As a percentage of adjusted revenue.
(16) Free cash flow is net cash generated from operating activities, less
payments to acquire intangible and tangible assets, payment of the principal
portion of lease liabilities and net finance expenses.
Investor and analyst meeting:
The group will be hosting an in-person presentation for analysts at 9.30am at
ASOS HQ, Greater London House, NW1 7FB. A live webcast will also be available,
and a recording of the presentation will be uploaded to the ASOS investor
relations website afterwards.
To access live please dial +44 330 088 5830 and use Meeting ID: 868 8702
0931and passcode: 474916. A live stream of the event will be available here
(http://www.asosfy.live) .
A recording of this webcast will be available on the ASOS Plc investor centre
website after the event: https://www.asosplc.com/investor-relations/
(https://www.asosplc.com/investor-relations/)
For further information:
Investors:
Holly Cassell, ASOS Head of Investor Relations Tel: 020 7756 1000
Media:
Jonathan Sibun / Will Palfreyman, Teneo Tel: 020 7353 4200
Background note
ASOS is a destination for fashion-loving 20-somethings around the world, with
a purpose to give its customers the confidence to be whoever they want to be.
Through its app and mobile/desktop web experience, available in nine languages
and in over 200 markets, ASOS customers can shop a curated edit of nearly
50,000 products, sourced from nearly 900 global and local third-party brands
alongside a mix of fashion-led own brand labels - including ASOS Design, ASOS
Edition, ASOS 4505, Collusion, Reclaimed Vintage, Topshop, Topman, and Miss
Selfridge. ASOS aims to give all its customers a truly frictionless
experience, with an ever-greater number of different payment methods and
hundreds of local deliveries and return options, including Next-Day Delivery
and Same-Day Delivery, dispatched from state-of-the-art fulfilment centres in
the UK, US, and Germany.
Forward looking statements:
This announcement may include statements that are, or may be deemed to be,
"forward-looking statements" (including words such as "believe", "expect",
"estimate", "intend", "anticipate" and words of similar meaning). By their
nature, forward-looking statements involve risk and uncertainty since they
relate to future events and circumstances, and actual results may, and often
do, differ materially from any forward-looking statements. Any forward-looking
statements in this announcement reflect management's view with respect to
future events as at the date of this announcement. Save as required by
applicable law, ASOS plc undertakes no obligation to publicly revise any
forward-looking statements in this announcement, whether following any change
in its expectations or to reflect events or circumstances after the date of
this announcement.
Consolidated Income Statement
For the financial period 1 September 2022 to 3 September 2023
1 September 2022 to Year ended 31 August 2022
3 September 2023
Adjusted Adjusting items (Note 3) Total Adjusted Adjusting items Total
Note (Note 3)
£m £m £m £m £m £m
Revenue 3,538.0 11.5 3,549.5 3,936.5 - 3,936.5
Cost of sales (1,974.6) (115.9) (2,090.5) (2,219.0) - (2,219.0)
Gross profit 1,563.4 (104.4) 1,459.0 1,717.5 - 1,717.5
Distribution expenses (429.7) - (429.7) (523.7) - (523.7)
Administrative expenses (1,164.7) (115.1) (1,279.8) (1,170.3) (53.9) (1,224.2)
Other income 2.0 - 2.0 20.6 - 20.6
Operating (loss)/profit (29.0) (219.5) (248.5) 44.1 (53.9) (9.8)
Finance income 5 5.0 - 5.0 0.9 - 0.9
Finance expense 5 (46.3) (6.9) (53.2) (23.0) - (23.0)
(Loss)/Profit before tax (70.3) (226.4) (296.7) 22.0 (53.9) (31.9)
Income tax credit/(expense) 6 17.4 56.2 73.6 (5.3) 6.4 1.1
(Loss)/Profit for the financial period (52.9) (170.2) (223.1) 16.7 (47.5) (30.8)
pence per share pence per share
(Loss) per share
Basic per share 7 (213.0) (30.9)
Diluted per share 7 (213.0) (30.9)
Consolidated Statement of Comprehensive Income
For the financial period 1 September 2022 to 3 September 2023
1 September 2022 to 3 September 2023 Year ended 31 August 2022
£m £m
Loss for the financial period (223.1) (30.8)
Items that will not be reclassified to Group income statement
Net fair value (losses)/gains on cash flow hedges (60.1) 51.2
Tax on items that will not be reclassified 9.7 (13.4)
(50.4) 37.8
Items that may be subsequently reclassified to Group income statement
Net translation movements offset in reserves (0.3) 0.3
Net fair value gains/(losses) on cash flow hedges 30.5 (25.9)
Fair value movements reclassified from cash flow hedge reserve to Group income 1.7 (15.6)
statement
Tax on items that may be reclassified (7.7) 9.5
24.2 (31.7)
Other comprehensive (loss)/income for the period (26.2) 6.1
Total comprehensive loss for the period attributable to owners of the parent (249.3) (24.7)
company
Consolidated Balance Sheet
As at 3 September 2023
Note 3 September 2023 31 August 2022
£m £m
Non-current assets
Goodwill and other intangible assets 8 700.5 683.9
Property, plant and equipment 9 362.6 351.7
Right-of-use assets 10 295.2 380.3
Investment Properties 10.9 -
Derivative financial assets 4.1 27.0
Deferred tax assets 17.8 -
1,391.1 1,442.9
Current assets
Inventories 768.0 1,078.4
Trade and other receivables 81.4 88.2
Derivative financial assets 22.4 41.4
Cash and cash equivalents 11 353.3 323.0
Current tax assets 9.4 23.0
1,234.5 1,554.0
Current liabilities
Trade and other payables 12 (680.4) (993.3)
Borrowings 13 (1.5) (1.4)
Lease liabilities 10 (25.3) (24.3)
Derivative financial liabilities (6.0) (21.0)
Provisions 14 (2.0) -
(715.2) (1,040.0)
Net current assets 519.3 514.0
Non-current liabilities
Borrowings 13 (671.3) (474.5)
Lease liabilities 10 (303.7) (355.8)
Deferred tax liabilities - (58.2)
Derivative financial liabilities (0.5) (11.6)
Provisions 14 (68.2) (41.9)
(1,043.7) (942.0)
Net assets 866.7 1,014.9
Equity attributable to owners of the parent
Called up share capital 4.2 3.5
Share premium 322.6 245.7
Other reserves 73.1 82.4
Retained earnings 466.8 683.3
Total equity 866.7 1,014.9
Consolidated Statement of Changes in Equity
For the financial period 1 September 2022 to 3 September 2023
Called up share capital Share premium Other reserves Retained earnings Total equity
£m £m £m £m £m
At 1 September 2022 3.5 245.7 82.4 683.3 1,014.9
Loss for the period - - - (223.1) (223.1)
Other comprehensive loss for the period - - (26.2) - (26.2)
Total comprehensive loss for the period - - (26.2) (223.1) (249.3)
Cash flow hedges gains and losses transferred to non-financial assets - - 16.9 - 16.9
Share issue 0.7 76.9 - - 77.6
Share-based payments charge - - - 6.4 6.4
Tax relating to share option scheme - - - 0.2 0.2
Balance as at 3 September 2023 4.2 322.6 73.1 466.8 866.7
At 1 September 2021 3.5 245.7 70.8 714.0 1,034.0
Loss for the year - - - (30.8) (30.8)
Other comprehensive income for the year - - 6.1 - 6.1
Total comprehensive income/(loss) for the year - - 6.1 (30.8) (24.7)
Cash flow hedges gains and losses transferred to non-financial assets - - 5.5 - 5.5
Share-based payments charge - - - 0.8 0.8
Tax relating to share option scheme - - - (0.7) (0.7)
Balance as at 31 August 2022 3.5 245.7 82.4 683.3 1,014.9
Retained earnings includes the share-based payments reserve, and employee
benefit trust reserve.
Consolidated Cash Flow Statement
For the financial period 1 September 2022 to 3 September 2023
1 September 2022 to 3 September 2023 Year to
£m
31 August 2022
£m
Operating loss (248.5) (9.8)
Adjusted for:
Depreciation of property, plant and equipment, right-of-use assets and 67.8 61.0
investment property
Amortisation of other intangible assets 104.7 88.8
Impairment charges on non-financial assets 32.1 19.2
Share-based payments charge 5.2 0.6
Other non-cash items 1.8 (4.9)
Settlement of contingent consideration in relation to employee benefits - (6.0)
Decrease/(increase) in inventories 310.4 (258.7)
Decrease/(increase) in trade and other receivables 12.7 (34.2)
(Decrease)/increase in trade and other payables (304.9) 21.5
Increase/(decrease) in provisions 16.8 (1.3)
Cash used in operating activities (1.9) (123.8)
Net income tax received 18.3 3.4
Net cash generated from/(used in) operating activities 16.4 (120.4)
Investing activities
Purchase of other intangible assets (136.2) (109.2)
Purchase of property, plant and equipment (41.7) (73.7)
Interest received 4.5 0.9
Net cash used in investing activities (173.4) (182.0)
Financing activities
Proceeds from issue of ordinary shares 77.6 -
Proceeds from borrowings 200.0 -
Drawdown of revolving credit facility 250.0 -
Repayment of borrowings (251.7) -
Refinancing fees (30.8) -
Repayment of principal portion of lease liabilities (22.4) (26.3)
Interest paid (33.6) (11.1)
Net cash generated from/(used in) financing activities 189.1 (37.4)
Net increase/(decrease) in cash and cash equivalents 32.1 (339.8)
Opening cash and cash equivalents 323.0 662.7
Effect of exchange rates on cash and cash equivalents (1.8) 0.1
Closing cash and cash equivalents 353.3 323.0
1 GENERAL INFORMATION
The financial information contained within this preliminary announcement for
the periods from 1 September 2022 to 3 September 2023 and 1 September 2021 to
31 August 2022 do not comprise statutory financial statements within the
meaning of section 434 of the Companies Act 2006. Statutory accounts for the
year to 31 August 2022 have been filed with the Registrar of Companies and
those for the period to 3 September 2023 will be filed following the Company's
annual general meeting. The auditors have reported on the 2023 accounts: their
report was (i) unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
ASOS Plc ('the Company') and its subsidiaries (together, 'the Group') is a
global fashion retailer. The Group sells products across the world and has
websites targeting countries that include the UK, US, Australia, France,
Germany, Spain, Italy, Sweden, the Netherlands, Denmark and Poland. The
Company is a public limited company whose shares are publicly traded on the
London Stock Exchange. The Company is incorporated and domiciled in the UK and
the address of its registered office is Greater London House, Hampstead Road,
London NW1 7FB.
The financial period represents the period from 1 September 2022 to 3
September 2023 (prior financial year: the year ended 31 August 2022). This
does not constitute a change in accounting reference date. The Group will
present results on a 52 or 53 week period in future periods to align with
internal reporting timelines. The financial information comprises the results
of the Company and its subsidiaries.
2 SIGNIFICANT ACCOUNTING POLICIES, JUDGEMENTS AND ESTIMATES
2.1 Basis of preparation
The consolidated financial statements have been prepared in accordance with
UK-adopted International Financial Reporting Standards (IFRS) and with the
requirements of the Companies Act 2006 and the Listing rules as applicable to
companies reporting under those standards.
The financial statements have been prepared under the historical cost basis of
accounting, excluding derivative financial instruments which are held at fair
value. The financial statements are presented in sterling and all values are
rounded to the nearest million pounds except where otherwise indicated.
2.2 Changes in presentation
Other comprehensive income
Other comprehensive income is now disclosed as a separate statement from the
consolidated income statement.
Consolidated balance sheet
The presentation of the consolidated balance sheet has been updated as
follows:
• Goodwill and other intangible assets are now disclosed as one line
item
• Right-of-use assets are now presented separately from property,
plant and equipment
• The employee benefit trust reserve which was previously disclosed
separately is now reported within retained earnings
• The cash flow hedge reserve, convertible bond reserve and
translation reserve are grouped and presented as Other Reserves in the
consolidated balance sheet, and within the consolidated statement of changes
in equity
The comparatives have also been updated to reflect these changes.
Consolidated cash flow statement
The presentation of the consolidated cashflow statement has been updated so
that movements in provisions are shown separately. These were previously
included within movements in trade and other payables. Comparatives have been
updated.
2.3 Going concern
The Directors are satisfied that the Group has sufficient resources to
continue in operation for a period of at least 12 months from the date of
approval of the financial statements, and therefore continue to adopt the
going concern basis in preparing the financial statements. To support this
assessment, detailed cash flow forecasts were prepared for the 18-month period
to February 2025.
In assessing the Group's going concern position, the Directors have considered
the Group's detailed budgeting and forecasting process which reflects the
Group's financial performance, position and cash flows over the going concern
period (the base case). These cash flow forecasts represent the Directors'
best estimate of trading performance and cost implications in the market based
on current agreements, market experience and consumer demand expectations. In
conjunction with this, the Directors considered the Group's business
activities and principal risks, reviewing the Group's cash flows, liquidity
positions and borrowing facilities for the going concern period.
The review included the continued availability of existing borrowings,
principally related to the new Bantry Bay debt facility and issued convertible
bonds, details of which can be found in Note 13. At 3 September 2023, the
Group was fully drawn on the £200m term loan with Bantry Bay, and had an
undrawn Revolving credit facility ("RCF") of £75m, with a maturity of April
2026, along with £500m convertible bonds with a maturity of April 2026. The
only covenant the Group is subject to under the debt facilities is a minimum
liquidity covenant of £90m, based on available cash and cash equivalents and
amounts undrawn under the RCF, which is the primary test within the going
concern assessment.
Key assumptions- forecasting business cashflows
The assessment of the Group's going concern position required significant
management judgement, including in determining the key assumptions that have
the greatest impact on forecasts of future business performance and the range
of reasonably possible outcomes of those assumptions. The economic environment
has remained challenging throughout FY23 with cost of living pressures
continuing to impact customer spending and sentiment. It is not known how long
this will continue to directly impact the business and consumer behaviour, nor
the impact that a changed economy will have on consumers over the going
concern period. For the purposes of the Group's going concern assessment, the
Directors have therefore made assumptions on the likely future cash flows in
the uncertain macro environment. The assumptions considered include the
continued transition to the Group's new operating model and subsequent working
capital improvements, as well as a marginal improvement in the macro trading
environment, with the online fashion market assumed to return to growth on an
aggregated basis across the Group's key territories. The base case assumes the
market backdrop within the initial going concern period is to remain
challenging, resulting in assumed year-on-year Group sales declines in FY24 of
between (5)% and (15)%, returning to year-on-year double digit sales growth
and subsequent market share gains by the end of the assessment period. The
base case also assumes modest year-on-year improvements in adjusted gross
margin during FY24, with up to c.300bps growth vs FY23 towards the end of the
assessment period.
Aligned to the Group's principal risks, the Directors have also considered
various severe but plausible downside scenarios against the base case,
comprising of the following assumptions:
• Sales growth reduction;
• Gross margin reduction;
• Potential working capital cash impacts.
The downside scenarios are considered and mapped by half, with the greater
degree of assumption-based improvements and subsequent volatility in the outer
periods commanding more severe downside sensitivities. Sensitivities mapped
against the base case within the downside case are highlighted below:
Downside vs base case H1 FY24 H2 FY24 H1 FY25
Sales (5)% (10)% (15)%
Gross Margin (140)bps (250)bps (220)bps
Working Capital impact (average) £(76)m £(84)m £(73)m
Should the Group see such significant events unfold it has several mitigating
actions it can implement to manage its liquidity risk, such as deferring
capital investment spend, deferring or reducing stock intake to match the
sales reduction, and implementing further cost management to maintain a
sufficient level of liquidity headroom during the going concern period. The
combined impact of the above downside scenarios and mitigations does not
trigger a minimum liquidity breach at any point in the going concern period,
and offers suitable headroom above the threshold referred to in the Bantry Bay
debt facility.
Reverse stress tests have also been performed on both the Group's revenue and
gross margin. The tests under consideration hold all metrics in line with the
downside case highlighted above, analysing how far the stress metric would
need to decline against the base case to cause a liquidity event. Such results
would have to see a minimum of c.30% decline in sales over the base case, or a
decline in gross margin from the base case of c.650bps across the entire
assessment period. Both are considered remote based on results of previous
significant economic events and recent trading performance, particularly on
the basis that the Group is annualising the challenging market conditions
experienced in FY23.
In assessing the group's ability to continue as a going concern the directors
have considered climate change risks. Transitional risk outcomes are expected
to manifest in the short to medium term (2025 to 2030). As the going concern
assessment covers the 18 months to February 2025 (i.e. the very beginning of
the TCFD transitional risk period) it is not considered that climate-related
risks result in any material uncertainties affecting the Group's ability to
continue as a going concern.
Based on the above, the Directors have concluded that, on the basis of there
being liquidity headroom under both the base case and downside scenarios, and
the consideration that the reverse stress test scenario is remote, it is
appropriate to adopt the going concern basis of accounting in the preparation
of the Group's annual financial statements, with no material uncertainty to
disclose.
2.5 Amendments to published standards
The Group has considered the following amendments to published standards that
are effective for the Group for the financial period beginning 1 September
2022 and concluded that they are either not relevant to the Group or that they
do not have a significant impact on the Group's financial statements other
than disclosures.
· Onerous Contracts - Cost of Fulfilling a Contract (Amendments to
IAS 37)
· Annual Improvements to IFRS Standards 2018-2020
· Property, Plant and Equipment: Proceeds before Intended Use
(Amendments to IAS 16)
· Reference to the Conceptual Framework (Amendments to IFRS 3)
The following standards and revisions will be effective for future periods:
· IFRS 17 'Insurance Contracts'
· Amendments to IAS 1 'Presentation of Financial Statements' and IFRS
Practice Statement 2 'Making Materiality Judgements' on the disclosure of
accounting policies
· Amendments to IAS 1 'Presentation of Financial Statements' on the
classification of liabilities as current or non-current
· Amendments to IAS 1 'Presentation of Financial Statements' on
non-current liabilities with covenants
· Amendments to IAS 8 'Accounting Policies, Changes in Accounting
Estimates and Errors' on the definition of accounting estimates
· Amendments to IAS 12 'Income Taxes' on Deferred Tax Related to Assets
and Liabilities Arising from a Single Transaction
· Amendments to IFRS 16 'Leases' on Lease Liability in a Sale and
Leaseback
· Amendments to IFRS 10 'Consolidated Financial Statements' and IAS 28
'Investments in Associates and Joint Ventures' on the sale or contribution of
assets between an investor and its associate or joint venture
The Group has considered the impact of the remaining above standards and
revisions and have concluded that they will not have a significant impact on
the Group's financial statements.
2.6 Alternative performance measures (APMs)
In the reporting of financial information, the Directors use various APMs.
These APMs should be considered in addition to, and are not intended to be a
substitute for, IFRS measurements. As they are not defined by International
Financial Reporting Standards, they may not be directly comparable with other
companies' APMs.
The Directors believe that these APMs provide additional useful information
for understanding the financial performance and health of the Group. They are
also used to enhance the comparability of information between reporting
periods (such as adjusted profit) by adjusting for non- recurring or
uncontrollable factors which affect IFRS measures, to aid users in
understanding the Group's performance.
Consequently, APMs are used by the Directors and management for performance
analysis, planning, reporting and incentive setting purposes. The APMs that
the Group has focused on in the period are defined and reconciled on pages 38
to 40. All of the APMs relate to the current period's results and comparative
periods.
3 ADJUSTED PROFIT BEFORE TAX
In order to provide shareholders with additional insight into the year-on-year
performance of the business, an adjusted measure of profit is provided to
supplement the reported IFRS numbers, and reflects how the business measures
performance internally. Adjusted items are those which are significant either
by virtue of their size and/or nature, the inclusion of which could distort
comparability between periods. The assessment is made both on an individual
basis and, if of a similar type, in aggregate.
The consolidated income statement is presented in a columnar format to enable
users of the financial statements to see the Group's performance before
adjusting items, the adjusting items, and the statutory total on a
line-by-line basis. An analysis of the adjusting items included in the
consolidated income statement, together with the impact of these items on the
consolidated cash flow statement, is disclosed below.
1 September 2022 to 3 September 2023 Revenue Cost of sales Administrative expenses Finance expenses Total adjustments before tax Tax Total
£m £m £m £m £m £m £m
Driving change agenda
Commercial operating model change 11.5 (130.0) (14.7) - (133.2) 33.2 (100.0)
Property-related costs - - (60.2) (0.5) (60.7) 15.2 (45.5)
Other strategic initiatives - - (24.6) (6.4) (31.0) 7.4 (23.6)
Amortisation of acquisition intangibles - - (10.7) - (10.7) 2.7 (8.0)
Other items - 14.1 (4.9) - 9.2 (2.3) 6.9
11.5 (115.9) (115.1) (6.9) (226.4) 56.2 (170.2)
Year to 31 August 2022 Revenue Cost of sales Administrative expenses Finance expenses Total adjustments before tax Tax Total
£m £m £m £m £m £m £m
ASOS Reimagined - - (25.4) - (25.4) 4.8 (20.6)
Main Market transition costs - - (5.7) - (5.7) (1.1) (6.8)
Impairment of Leavesden assets - - (18.5) - (18.5) 2.3 (16.2)
Employee and other liabilities relating to acquisition of Arcadia brands - - 6.4 - 6.4 (1.2) 5.2
Amortisation of acquired intangible assets - - (10.7) - (10.7) 1.6 (9.1)
- - (53.9) - (53.9) 6.4 (47.5)
Driving change agenda
In October 2022, ASOS' new CEO delivered an assessment of the business's
strengths and weaknesses and launched the Driving Change agenda to return ASOS
to profitability and cash generation. This strategy centred around four
pillars:
a. A renewed commercial model: A new approach to buying, merchandising,
managing and clearing stock designed to increase flexibility and improve stock
turn, increasing full price sales and generating cash.
b. Stronger order economics and a lighter cost profile: Actions to improve
order profitability in all markets while reducing costs in all parts of the
business.
c. Robust, flexible balance sheet: Ensuring sufficient flexibility in the
Group's balance sheet to successfully execute its strategy while aligning
investment with capacity requirements to ensure a more efficient allocation of
capital.
d. Enabled by a reinforced leadership team and refreshed culture:
Reinforcing the Senior Leadership team with strategic hires while embedding a
more innovative culture at all levels.
Various items of income and expenditure have been incurred during the period
in relation to this, as outlined below.
Commercial operating model
A key focus for ASOS in FY23 has been the introduction of the new commercial
operating model which was approved by the Board during the current financial
period. The new model involves a more disciplined approach to intake,
increased speed to market and clearing product more quickly to reduce the
Group's inventory requirement, increase full price sales and hence gross
margin, and improve customer engagement. To unlock these benefits, the Group
must also clear old stock acquired under its previous ways of working. As such
and in addition to clearance via its own platform, ASOS is utilising offsite
clearance routes to support its transition to the new model.
To transition to the new model, a reshaping of the inventory portfolio has
been required, and as a result additional costs have been recognised totalling
£133.2m. This comprises losses on stock cleared during the period, net of
income received of £11.5m, as well as provisions for stock (either held as at
FY22 or committed to purchase as at FY22) that will be sold through
alternative clearance channels (i.e. not via the ASOS website).
Extraction and relevant holding costs totalling £14.7m have also been
incurred.
Property related costs
During the period it was agreed to vacate a number of Group-occupied sites,
including office and warehouse space. As a result, costs of £60.7m have been
incurred, comprising the following:
1 September 2022 to 3 September 2023 £m
Impairment of property, plant and equipment (a) (5.6)
Impairment of intangible assets (a) (1.7)
Impairment of right of use assets (a) (20.0)
Impairment of investment property (a) (1.3)
Accelerated depreciation (b) (7.6)
Exit provisions (c) (18.3)
Other closure costs (d) (6.2)
(60.7)
a) Impairment of assets for sites vacated during the financial period. The
related assets have been written off in full.
b) The remaining useful economic lives of corresponding sites have been
reassessed to align with closure dates, resulting in an acceleration in
depreciation of these assets. The existing depreciation of these assets
(depreciation that would have been recognised absent of a closure decision) is
recognised within adjusted profit, whereas accelerated depreciation above this
is recognised outside of adjusted profit.
c) Exit provisions relate to onerous contract costs on leased sites that
have been identified for closure. Upon initial recognition of exit provisions,
management uses its best estimates of the relevant costs to be incurred as
well as expected closure dates. This excludes business rates on leased
property which are recognised in the period they are incurred. Whilst the
properties remain vacant, ongoing expenses relating to lease interest, onerous
provision unwinds and business rates will be reported outside adjusted profit
given they do not relate to operational sites of the Group.
d) Relates to negotiated exit costs to vacate certain leased sites ahead of
the lease end date.
Other strategic initiatives
Other priorities for FY23 communicated at the FY22 results included: (i)
stronger order economics and a lighter cost profile, (ii) a robust, flexible
balance sheet, and, (iii) a reinforced leadership team and refreshed culture.
ASOS has progressed with each of these priorities during the period, with
costs of £31.0m incurred and excluded from adjusted profit. These
predominantly relate to external consultancy costs to support the launch of
the programme and the identification of initiatives (£8.9m), severance costs
(£7.7m), costs incurred associated with the revolving credit facility
covenant waiver and subsequent refinancing during the year (£8.1m - refer to
Note 13 for more detail) and other business restructuring costs (£6.3m). The
Driving Change agenda has replaced the Group's ASOS Reimagined programme that
commenced in the prior year.
Costs incurred last year in relation to ASOS Reimagined totalled £25.4m,
bringing cumulative change agenda costs incurred to date to £250.3m
(including the commercial model change and property initiatives), of which
£63.0m is cash.
Amortisation of acquired intangible assets
Amortisation of acquired intangible assets is adjusted for as acquisitions are
outside business-as-usual operations for ASOS. These assets would not normally
be recognised outside of a business combination, therefore the associated
amortisation is adjusted.
Other items
During the period, the Group corrected in-aggregate and individually
immaterial items relating to prior years totalling £9.2m.
Prior year adjusting items
Items recognised outside adjusted profit in the prior year relate to:
· ASOS Reimagined - A multi-year programme to enable the business to
accelerate delivery of the strategy and medium-term plan set out at the
Capital Markets Day held on 10 November 2021. This has subsequently been
replaced by the Group's Driving Change agenda.
· Main Market transition costs - ASOS' transition to the Main Market of
the London Stock Exchange, which was completed on 22 February 2022.
· Impairment of Leavesden assets - A non-cash impairment charge
relating to the right-of-use assets and associated fixtures and fittings at
part of ASOS' Leavesden office.
· Employee and other liabilities relating to Arcadia acquisition - The
release of a contingent liability relating to employee and other costs, which
was originally recognised as part of the Arcadia acquisition in February 2021.
Classification as adjusting items
Given a number of the costs incurred as part of the above programmes
facilitate future ongoing cost savings, it was considered whether it was
appropriate to report these costs within adjusted profit/(loss). Whilst they
arise from changes in the Group's underlying operations, they can be
separately identified, are significant in size/nature and their inclusion
within adjusted profit/(loss) does not facilitate meaningful comparison
between financial periods. Furthermore, the costs incurred arise as a result
of implementing changes for the future to evolve and reshape the business and
are therefore not reflective of ordinary, in-year trading activity, and for
areas being closed or restructured, these operations no longer relate to the
Group's trading operations. Exclusion from adjusted profit/(loss) is therefore
considered appropriate.
Cash flow impact of adjusting items
The total cash flow impact of adjusting items is as follows:
1 September 2022 to 3 September 2023 Year to 31 August 2022
£m £m
Commercial operating model change 3.5 -
Other strategic initiatives (including ASOS Reimagined) (56.9) (12.5)
Main Market transition costs - (5.7)
Total adjusting items within cash flow (53.4) (18.2)
Other strategic initiatives includes £30.8m fees paid in relation to
refinancing included within cash flows from financing activities, as detailed
in Note 13.
An additional property initiative was approved after the balance sheet date
for which costs are expected next year that will be excluded from adjusted
profit. Refer to Note 17 for additional information.
4 SEGMENTAL ANALYSIS
IFRS 8 'Operating Segments' requires operating segments to be identified on
the basis of internal reporting on components of the Group that are regularly
reviewed by the chief operating decision-maker to allocate resources to the
segments and to assess their performance.
The Chief Operating Decision Maker has been determined to be the Management
Committee (renamed from the Executive Committee as part of the Group's Driving
Change agenda). It is the Management Committee that reviews the Group's
internal reporting in order to assess performance and allocate resources
across the business. In doing so, the Management Committee reviews performance
across the Group via a number of sources, comprising regular monthly
management accounts, and ad hoc analysis that provides deep dives into
different areas, including territory, brands and revenue streams.
In determining the Group's operating segments, management has considered the
level of information which is regularly reviewed by the Management Committee.
Information regularly reviewed by the Management Committee is at a
consolidated Group level only, with some disaggregated revenue information and
associated metrics provided for the geographical territories of the UK, the
US, Europe and the Rest of the World. However, decisions on resource
allocation are not made based on this information. Such decisions are made on
ad hoc analysis, separately provided to the Management Committee, and does not
constitute information that is either regularly provided to, nor reviewed by,
the Management Committee. As a result, it has been concluded that the Group
has only one operating segment (the Group level).
Information by Geographical territory is included below in line with the
entity-wide disclosure requirements of IFRS 8 "Operating Segments".
1 September 2022 to 3 September 2023
UK EU US Rest of world Total
£m £m £m £m £m
Retail sales 1,494.6 1,127.3 443.6 322.7 3,388.2
Income from other services 59.8 29.4 57.5 14.6 161.3
Total revenue 1,554.4 1,156.7 501.1 337.3 3,549.5
Cost of sales (2,090.5)
Gross profit 1,459.0
Distribution expenses (429.7)
Administrative expenses (1,279.8)
Other income 2.0
Operating loss (248.5)
Finance income 5.0
Finance expense (53.2)
Loss before tax (296.7)
Non-current assets(1) 994.1 177.9 162.0 - 1,334.0
Year to 31 August 2022
UK EU US Rest of world Total
£m £m £m £m £m
Retail sales 1,703.3 1,142.6 472.7 454.0 3,772.6
Income from other services 59.5 27.4 58.7 18.3 163.9
Total revenue 1,762.8 1,170.0 531.4 472.3 3,936.5
Cost of sales (2,219.0)
Gross profit 1,717.5
Distribution expenses (523.7)
Administrative expenses (1,224.2)
Other Income 20.6
Operating loss (9.8)
Finance income 0.9
Finance expense (23.0)
Loss before tax (31.9)
Non-current assets(1) 1,006.7 188.8 185.2 - 1,380.7
(1) Non-current assets above exclude goodwill, derivative financial assets and
deferred tax assets.
The above presentation is consistent with the analysis provided to the chief
operating decision maker within the monthly management accounts.
Due to the nature of its activities, the Group is not reliant on any
individual major customers.
5 FINANCE INCOME AND EXPENSES
1 September 2022 to Year ended 31 August 2022
3 September 2023
£m £m
Finance income 5.0 0.9
Interest on convertible bond and other borrowings (50.8) (19.5)
IFRS 16 lease interest (5.6) (5.4)
Provisions - unwind of discount (1.6) (0.2)
Interest capitalised 4.8 2.1
Total finance expense (53.2) (23.0)
6 TAXATION
1 September 2022 to Year to 31 August 2023
3 September 2023
£m £m
Current year UK tax - (11.8)
Current year overseas tax 3.4 0.9
Adjustment in respect of prior year corporation tax (4.1) (3.0)
Total current tax credit (0.7) (13.9)
Origination and reversal of temporary differences (73.2) 11.2
Adjustment from changes in tax rates (0.1) 0.2
Adjustment in respect of prior years 0.4 1.4
Total deferred tax (credit)/charge (72.9) 12.8
Total income tax credit in income statement (73.6) (1.1)
Analysed as:
Tax on adjusted profit (17.4) 5.3
Tax on items excluded from adjusted profit (56.2) (6.4)
Total income tax credit in income statement (73.6) (1.1)
Effective tax rate 24.8% 3.4%
7 EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit attributable to
the owners of the parent company ASOS Plc by the weighted average number of
ordinary shares in issue during the period. Own shares held by the Employee
Benefit Trust and Link Trust are excluded from the weighted average number of
ordinary shares.
Diluted earnings per share is calculated by dividing the profit attributable
to the owners of the parent company by the weighted average number of ordinary
shares in issue during the period, excluding own shares held, adjusted for the
effects of potentially dilutive ordinary shares. The dilutive impact is
calculated as the weighted average of all potentially dilutive ordinary
shares. These represent share options granted by the Group, including
performance-based options, where the scheme to date performance is deemed to
have been earned. It also includes the number of shares that would be issued
if all convertible bonds are assumed to be converted unless the convertible
instrument is out-of-the-money and not expected to convert. All operations are
continuing for the periods presented.
1 September 2022 to 3 September 2023 Year to 31 August 2022
Weighted average share capital
Weighted average shares in issue for basic earnings per share (no. of shares) 104,729,376 99,696,028
Weighted average effect of dilutive options (no. of shares)(1) - -
Weighted average effect of convertible bond (no. of shares)(2) - -
Weighted average shares in issue for diluted earnings per share (no. of 104,729,376 99,696,028
shares)
Loss after tax for the financial period (£m)
Loss attributable to owners of the parent company for basic earnings per share (223.1) (30.8)
Interest expense on convertible bonds(1) - -
Diluted loss attributable to owners of the parent company for diluted loss per (223.1) (30.8)
share
Basic loss per share (pence per share) (213.0) (30.9)
Diluted loss per share (pence per share) (213.0) (30.9)
( )
(1) Dilutive shares and interest not included where their effect is
anti-dilutive
(2) The impact of convertible bonds on the weighted average share capital has
been excluded as it is not assumed they will be exercised
8 GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill Brands Customer relationships Domain names Software Assets under construction Total
£m £m £m £m £m £m £m
Cost
As at 1 September 2022 35.5 219.4 24.4 0.2 752.4 3.6 1,035.5
Additions - - - - 109.4 17.1 126.5
Transfers - - - - 1.7 (1.7) -
As at 3 September 2023 35.5 219.4 24.4 0.2 863.5 19.0 1,162.0
Accumulated amortisation and impairment
As at 1 September 2022 0.3 12.0 4.7 - 334.6 - 351.6
Amortisation expense - 7.8 3.1 - 93.8 - 104.7
Impairment charge for the period - - - - 3.1 2.1 5.2
As at 3 September 2023 0.3 19.8 7.8 - 431.5 2.1 461.5
Net book value at 3 September 2023 35.2 199.6 16.6 0.2 432.0 16.9 700.5
Cost
As at 1 September 2021 33.4 219.4 24.4 0.2 636.8 0.8 915.0
Additions 2.1 - - - 114.6 3.8 120.5
Transfers - - - - 1.0 (1.0) -
As at 31 August 2022 35.5 219.4 24.4 0.2 752.4 3.6 1,035.5
Accumulated amortisation and impairment
As at 1 September 2021 0.3 4.3 1.7 - 256.5 - 262.8
Amortisation expense - 7.7 3.0 - 78.1 - 88.8
As at 31 August 2022 0.3 12.0 4.7 - 334.6 - 351.6
Net book value at 31 August 2022 35.2 207.4 19.7 0.2 417.8 3.6 683.9
Intangible assets under construction relates to spend on software-based
projects, including the enhancement of the Group's mobile apps/website, and
other software. No individual projects are material in value.
9 PROPERTY, PLANT AND EQUIPMENT
Fixtures, fittings, plant and machinery Computer hardware Assets under construction Total
£m £m £m £m
Cost
As at 1 September 2022 408.5 41.1 65.4 515.0
Additions 1.1 0.6 46.2 47.9
Transfers 1.1 1.3 (2.4) -
As at 3 September 2023 410.7 43.0 109.2 562.9
Accumulated depreciation and impairment
As at 1 September 2022 134.8 26.0 2.5 163.3
Charge for the period 25.4 6.0 - 31.4
Impairment charge for the period 5.2 0.1 0.3 5.6
As at 3 September 2023 165.4 32.1 2.8 200.3
Net book value at 3 September 2023 245.3 10.9 106.4 362.6
Cost
As at 1 September 2021 386.2 34.4 16.1 436.7
Additions 21.5 6.7 50.1 78.3
Transfers 0.8 - (0.8) -
As at 31 August 2022 408.5 41.1 65.4 515.0
Accumulated depreciation and impairment
As at 1 September 2021 101.9 20.8 - 122.7
Charge for the year 25.5 5.2 - 30.7
Impairment charge for the year 7.4 - 2.5 9.9
As at 31 August 2022 134.8 26.0 2.5 163.3
Net book value at 31 August 2022 273.7 15.1 62.9 351.7
Significant assets under construction as at 3 September 2023 consisted
primarily of amounts spent to automate the Atlanta fulfilment centre totalling
£58.0m (2022: £41.5m) and the Lichfield fulfilment centre £46.8m (2022:
£16.2m).
10 LEASES
Right-of-use assets
Set out below are the carrying amounts of right-of-use assets recognised and
the movements during the period. Right-of-use assets comprise entirely leases
for land and buildings.
1 September 2022 to 3 September 2023 Year to 31 August 2022
£m £m
At the beginning of the period 380.3 345.2
Modifications (9.6) 69.2
Impairment charge (20.0) (9.3)
Depreciation charge (35.9) (30.3)
Transfers to investment property (12.8) -
Foreign exchange differences (6.8) 5.5
At the end of the period 295.2 380.3
The Group presents additions to right-of-use assets in line with the
disclosure requirements of IFRS 16 'Leases'. In doing so, modifications above
includes the impact of lease terminations, modifications and reassessments,
and changes to dilapidation estimates.
Right-of-use assets totalling £12.8m were transferred to investment property
during the year and relate to sites the Group sublets, or that are currently
vacant with the intention of subletting.
Lease liabilities
Set out below are the carrying amounts of lease liabilities and the movements
during the period:
1 September 2022 to Year to
3 September 2023 31 August 2022
£m £m
At the beginning of the period 380.1 328.9
Modifications (21.1) 71.3
Payments (28.0) (31.7)
Interest expense 5.6 5.4
Foreign exchange differences (7.6) 6.2
At the end of the period 329.0 380.1
Current 25.3 24.3
Non-current 303.7 355.8
Total 329.0 380.1
11 CASH AND CASH EQUIVALENTS
As at 3 September 2023 As at 31 August 2022
£m £m
Cash in hand and bank balances 85.6 137.5
Money market fund investments 142.7 145.5
Deposits at financial institutions 125.0 40.0
Closing cash and cash equivalents 353.3 323.0
Cash and cash equivalents includes uncleared payment provider receipts of
£63.3m, which are typically due within 3 business days (2022: £51.2m).
Included within cash and cash equivalents is £4.1m (2022: £0.8m) of cash
collected on behalf of partners of the Direct to Consumer fulfilment
proposition 'Partner Fulfils'. ASOS Payments UK Limited and the Group are
entitled to interest amounts earned on the deposits and amounts are held in a
segregated bank account that is settled on a monthly basis.
12 TRADE AND OTHER PAYABLES
As at 3 September 2023 As at 31 August 2022
£m £m
Trade payables 71.3 94.0
Other payables 174.7 255.6
Accruals 238.7 401.8
Returns provision 108.2 147.2
Deferred revenue 52.1 54.4
Taxation and social security 35.4 40.3
680.4 993.3
Trade and other payables have been presented in more detail than previously in
order to provide more useful information to users of the financial statements.
In doing so, the allocation between some categories has changed. Prior periods
have been represented where relevant. The reduction in total trade and other
payables is predominantly as a result of lower intake receipts and operating
costs in the second half of the year as the Group transitions to its new
commercial operating model.
13 BORROWINGS
As at 3 September 2023 As at 31 August 2022
£m £m
Convertible bond 464.4 451.0
Term Loan 184.8 -
Nordstrom loan 20.4 22.0
Put option liability 3.2 2.9
Total 672.8 475.9
Current 1.5 1.4
Non-current 671.3 474.5
Total 672.8 475.9
Convertible bonds
On 16 April 2021 the Group issued £500m of convertible bonds. The unsecured
instruments pay a coupon of 0.75% until April 2026, or the conversion date, if
earlier. The initial conversion price was set at £79.65 per share. The fair
value of the debt component was determined using the market interest rate for
an equivalent non-convertible bond, deemed to be 3.4%. As a result, £440.1m
was recognised as a liability in the balance sheet on issue and the remainder
of the proceeds, £59.9m, which represents the equity component, was credited
to reserves. Issue costs of £9.0m were allocated between equity (£1.0m) and
debt (£8.0m).
Term loan
In May 2023, the Group entered into a £200m senior term loan and a £75m
super senior revolving facility (the "New RCF") (together the "New
Facilities") with specialist lender Bantry Bay Capital Limited through to
April 2026, with the optionality to further extend to May 2028 subject to
meeting lender requirements. The New Facilities have replaced the previous
£350m revolving credit facility (the "Old RCF") which was due to expire in
November 2024 following the amendment and extension announced alongside the
Company's interim results on 10 May 2023. Fees totalling £21.7m were
incurred, of which £15.8m was applied to the term loan, with the remainder
relating to the New RCF and capitalised within prepayments.
Both the senior term loan and New RCF (when drawn) bear interest at a margin
above SONIA. The New RCF incurs commitment fees at a market rate.
The New Facilities are subject only to a minimum liquidity covenant defined as
cash and cash equivalents plus amounts undrawn under the New RCF. The New
Facilities carry a fixed and floating charge over all assets of the following
chargors in the Group - ASOS Plc, ASOS.com Limited, ASOS Intermediate Holdings
Limited, Mornington & Co (No. 1) Limited and Mornington & Co (No. 2)
Limited.
Nordstrom Loan
On 12 July 2021 the Group announced a strategic partnership with Nordstrom, a
US-based multi-channel retailer, to drive growth in North America. As part of
this venture, Nordstrom purchased a minority interest in ASOS Holdings Limited
which holds the Topshop, Topman, Miss Selfridge and HIIT brands in exchange
for £10 as well as providing a £21.9m loan. The loan attracts interest at a
market rate of 6.5% per annum. The resulting liability is £20.4m as at 3
September 2023 (2022: £22.0m), this is following a partial repayment of the
loan totalling £1.7m (2022: £nil) being made in the period. As part of this
agreement a written put option was provided to Nordstrom over their shares in
ASOS Holdings Limited, valued at £3.2m as at 3 September 2023.
Refinancing fees included in cash flow
Refinancing fees included in the cash flow statement total £30.8m, and are
reconciled to their location in the financial statements as follows:
Income statement Balance sheet
Administrative expenses Finance costs Borrowings Prepayments
Fee description Cash Outside adjusted profit Outside adjusted profit Within adjusted profit
£m £m £m £m £m £m
Fees incurred in relation to covenant waiver exercise in October 2022 7.1 1.7 4.0 1.4 - -
Extension fees incurred in May 2023 for old RCF 2.0 - 2.0 - - -
Refinancing fees for New Facilities 21.7 - - - 15.8 5.9
Total 30.8 1.7 6.0 1.4 15.8 5.9
Other non-cash (write off of previously capitalised fees) - - 0.4 - - -
Total 30.8 1.7 6.4 1.4 15.8 5.9
14 PROVISIONS
Dilapidations Onerous occupancy Total
£m £m £m
As at 1 September 2022 41.9 - 41.9
Recognised 11.2 18.3 29.5
Utilised - (1.8) (1.8)
Unwinding of discount 1.3 0.3 1.6
Exchange differences (1.0) - (1.0)
As at 3 September 2023 53.4 16.8 70.2
Current - 2.0 2.0
Non-current 53.4 14.8 68.2
As at 3 September 2023 53.4 16.8 70.2
As at 1 September 2021 43.2 - 43.2
Recognised 10.8 - 10.8
Effects of movements in discount rates (13.2) - (13.2)
Unwinding of discount 0.2 - 0.2
Exchange differences 0.9 - 0.9
As at 31 August 2022 41.9 - 41.9
Current - - -
Non-current 41.9 - 41.9
As at 31 August 2022 41.9 - 41.9
Dilapidations are recognised where there is a present obligation to repair and
restore leased properties to their preoccupancy state at the end of the lease
term.
Where the Group no longer operates from a leased property, onerous property
contract provisions are recognised for the least net cost of exiting from the
contract. The amounts provided are based on the Group's best estimates of the
likely committed outflows and site closure dates. These provisions do not
include rent in accordance with IFRS 16, however do include unavoidable costs
related to the lease such as service charges and insurance.
15 NET DEBT RECONCILIATION
Group net debt comprises cash and cash equivalents less any borrowings drawn
down at period-end (including accrued interest), but excluding outstanding
lease liabilities.
Lease liabilities Borrowings Cash and cash equivalents Total
£m £m £m £m
As at 1 September 2022 (380.1) (475.9) 323.0 (533.0)
Cash flow movements 28.0 (154.5) 27.6 (98.9)
Cash flow excluding interest 22.4 (198.3) 32.1 (143.8)
Net interest paid/(received) 5.6 28.0 (4.5) 29.1
Financing fees paid - 15.8 - 15.8
Non-cash movements 23.1 (42.4) 2.7 (16.6)
Movement in lease liabilities 21.1 - - 21.1
Foreign exchange impacts 7.6 - (1.8) 5.8
Accrued interest (5.6) (42.4) 4.5 (43.5)
As at 3 September 2023 (329.0) (672.8) 353.3 (648.5)
Net debt (excluding leases) (319.5)
As at 1 September 2021 (328.9) (463.2) 662.7 (129.4)
Cash flow movements 31.7 5.7 (340.7) (303.3)
Cash flow excluding interest 26.3 - (339.8) (313.5)
Net interest paid/(received) 5.4 5.7 (0.9) 10.2
Non-cash movements (82.9) (18.4) 1.0 (100.3)
Movement in lease liabilities (71.3) - - (71.3)
Foreign exchange impacts (6.2) - 0.1 (6.1)
Accrued interest (5.4) (18.4) 0.9 (22.9)
As at 31 August 2022 (380.1) (475.9) 323.0 (533.0)
Net debt (excluding leases) (152.9)
16 CONTINGENT LIABILITIES
From time to time, the Group is subject to various legal proceedings and
claims that arise in the ordinary course of business, which due to the
fast-growing nature of the Group and its ecommerce base, may concern the
Group's brand and trading name or its product designs. All such cases brought
against the Group are robustly defended and a liability is recorded only when
it is probable that the case will result in a future economic outflow which
can be reliably measured.
The Group is currently party to legal proceedings in overseas territories.
These proceedings are in their very early stages and the Group is robustly
defending them. Given the early stages, the Group cannot make any assessment
of the likelihood nor quantum of any outcome. No provision has therefore been
recognised on the Group's balance sheet.
The Group is currently party to a voluntary disclosure made to an overseas tax
authority in relation to potentially overclaimed VAT. Suppliers to the Group
have historically charged VAT on services which should possibly have been
charged without VAT. If it is concluded that VAT should not have been charged,
ASOS will be required to either repay circa £90m to the related tax authority
and reclaim said amounts from the suppliers or reach multi-party, non-cash
agreements between the tax authority, the suppliers and ASOS. At this time it
is unclear whether VAT should or should not have been charged, with facts
supporting both views. The correct position will ultimately be determined by
the relevant tax authorities, and as a result the Group considers there to be
only a possible risk that a payment will be required. The Group is actively
working with the suppliers and tax authorities to conclude and notes that in
either scenario the tax authority concerned has not suffered a loss of tax
revenue as amounts claimed by ASOS have been matched by payments made by
suppliers.
17 POST BALANCE SHEET EVENTS
After the balance sheet date, on 6 October 2023, the Board approved the
commencement of a process to either sell or mothball the Lichfield fulfilment
centre, following completion of the automation project in late FY24. At the
year-end, the site was in use and will remain as such until the automation
work completes.
At the year-end, assets held in relation to Lichfield totalled circa £110m,
as well as lease liabilities of circa £30m. Costs to complete the automation
are estimated at £45m. As a result of the decision, an impairment of the
existing assets is likely to be required, which together with committed future
automation spend, will be recognised directly within administrative expenses,
and outside adjusted profit. Any impairments are ultimately dependent on
future decisions regarding the site, which include recommissioning the site,
leaving vacant, or securing the sale of the related equipment and assigning
the lease.
ALTERNATIVE PERFORMANCE MEASURES (APMs)
The Group uses the below non-IFRS performance measures to allow shareholders
to better understand underlying financial performance and position. These
should not be seen as substitutes for IFRS measures of performance and may not
allow a direct comparison to other companies.
Performance measure Closest IFRS measure Definition How ASOS uses this measure
Revenue growth at constant currency None ASOS calculates constant currency (CCY) growth by adjusting the current year This measure is presented as a means of eliminating the effects of exchange
reported revenue number for the impact of year-on- year changes in the hedge rate fluctuations on the period-on-period reported results.
rate on hedged sales and year-on-year spot rate movements on unhedged sales.
The current period also adjusts for the impact of the three additional trading
days in FY23. This provides revenue growth on a like-for-like basis vs. last
year, giving users of the accounts a better view of underlying sales
performance that is not impacted by exchange rate fluctuations.
1 September 2022 to 3 September 2023 Year to 31 August 2022 Growth
£m £m %
Adjusted Revenue(1) 3,448.0 3,859.7 (11)%
Impact of foreign exchange translation, non-underlying Jobber income and LFL 101.5 - -
financial periods
Excluding Russia - 76.8 -
Group revenue 3,549.5 3,936.5 (10)%
1
Adju
sted
reve
nue,
stat
ed
on a
cons
tant
curr
ency
basi
s,
excl
udin
g
Russ
ia
from
H1
FY22
,
and
remo
ving
the
impa
ct
of
the
3
extr
a
trad
ing
days
in
FY23
.
Year to 31 August 2022 Year to 31 August 2021 Growth
£m £m %
Revenue at constant currency 3,972.7 3,910.5 2%
Impact of foreign exchange translation (36.2) - -
Group revenue 3,936.5 3,910.5 1%
Retail sales Revenue Internet sales recorded net of an appropriate deduction for actual and A measure of the Group's trading performance focusing on the sale of products
expected returns, relevant vouchers, discounts and sales taxes. to end customers. Used by management to monitor overall performance across
markets, and the basis of key internal KPIs such as ABV.
Retail sales exclude income from delivery receipt payments, marketing A
services, commission on partner-fulfilled sales and revenue from wholesale reco
sales. ncil
iati
on
of
this
meas
ure
is
incl
uded
in
Note
4.
Adjusted revenue Revenue Revenue excluding the impact of adjusting items. A measure of the Group's revenue and gross profitability, excluding the impact
of any adjusting items.
Adjusted gross margin Gross profit divided by revenue and excluding the impact of adjusting items.
None
Reco
ncil
iati
on
is
show
n
belo
w:
1 September 2022 to 3 September 2023 Year to 31 August 2022
£m £m
Revenue 3,549.5 3,936.5
Adjusting items (11.5) -
Adjusted revenue 3,538.0 3,936.5
Gross profit 1,459.0 1,717.5
Adjusting items 104.4 -
Adjusted gross profit 1,563.4 1,717.5
Gross margin 41.1% 43.6%
Adjusted gross margin % 44.2% 43.6%
Performance measure Closest IFRS measure Definition How ASOS uses this measure
Adjusted EBIT Operating (loss)/profit Profit before tax, interest, and any adjusting items excluded from adjusted A measure of the Group's underlying profitability for the period, excluding
profit before tax (see below). the impact of any transactions outside of the ordinary course of business and
not considered to be part of ASOS' usual cost base. Used by management to
monitor the performance of the business each month.
Adjusted (loss)/profit before tax excludes items recognised in reported profit
or loss before tax which, if included, could distort comparability between
periods. In determining which items to exclude, the Group considers items
(Loss)/profit before tax which are significant either by virtue of their size and/or nature, or that
are non-recurring.
Adjusted (loss)/profit before tax
1 September 2022 to 3 September 2023 Year to 31 August 2022
£m £m
Operating loss (248.5) (9.8)
Adjusting items excluding finance costs (Note 3) 219.5 53.9
Adjusted EBIT (29.0) 44.1
Net finance costs (Note 5) (48.2) (22.1)
Add back adjusting finance costs (Note 3) 6.9 -
Adjusted (loss)/profit before tax (70.3) 22.0
Group revenue 3,549.5 3,936.5
Adjusting items (11.5) -
Adjusted Group revenue 3,538.0 3,936.5
Adjusted EBIT margin (0.8)% 1.1%
Details of adjusting items are included within Note 3.
Adjusted EBITDA No direct equivalent Adjusted EBIT above, adjusted for depreciation, amortisation and impairments. EBITDA is used to review the Group's profit generation and the sustainability
of ongoing capital reinvestment and finance costs.
1 September 2022 to 3 September 2023 Year to 31 August 2022
£m £m
Adjusted EBIT (above) (29.0) 44.1
Add back depreciation and amortisation (per cash flow) 172.5 149.8
Add back impairment (per cash flow) 32.1 19.2
Less depreciation and amortisation excluded from adjusted profit(1) (19.6) (10.7)
Less impairment excluded from adjusted profit(2) (31.5) (18.5)
Adjusted EBITDA 124.5 183.9
1 Comprises £18.3m within property initiatives, and £1.3m within the
commercial operating model change
2 Comprises £28.6m within property initiatives, and £2.9m within strategic
initiatives
1 Comprises £18.3m within property initiatives, and £1.3m within the
commercial operating model change
2 Comprises £28.6m within property initiatives, and £2.9m within strategic
initiatives
Performance measure Closest IFRS measure Definition How ASOS uses this measure
Net cash/(debt) No direct equivalent Cash and cash equivalents less the carrying value of borrowings (including A measure of the Group's liquidity.
accrued interest) drawn down at period-end, but excluding outstanding lease
liabilities.
Information is included in Note 15. A reconciliation is included below:
1 September 2022 to 3 September 2023 Year to 31 August 2022
£m £m
Cash and cash equivalents 353.3 323.0
Borrowings (672.8) (475.9)
Lease liabilities (329.0) (380.1)
Net borrowings (648.5) (533.0)
Add-back lease liabilities 329.0 380.1
Group net debt (319.5) (152.9)
Free cash flow No direct equivalent Free cash flow is net cash generated from operating activities, less payments A measure of the cash generated by the Group outside cash flows relating to
to acquire intangible and tangible assets, payment of the principal portion of M&A and financing transactions, which allows management to better assess
lease liabilities and net finance expenses. the cash being generated by the business.
A reconciliation to the Group cash flow is shown below:
1 September 2022 to 3 September 2023 Year to 31 August 2022
£m £m
Cash used generated from/(used in) operations (per cash flow) 16.4 (120.4)
Purchase of tangible and intangible assets (177.9) (182.9)
Repayment of principal portion of lease liabilities (22.4) (26.3)
Net interest paid (29.1) (10.2)
Free cash flow (213.0) (339.8)
Appendix 1 - Total sales growth by period in sterling, including Russia
Period to 3 September 2023
£m P1(1) YOY% P2(1) YOY% P3(1) YOY% P4(1) YOY% 2022/23 FY YOY%
UK total sales 591.3 (8%) 212.4 (15%) 370.3 (14%) 380.4 (13%) 1,554.4 (12%)
EU total sales 417.3 7% 169.3 (10%) 283.5 (4%) 286.6 (4%) 1,156.7 (1%)
US total sales 198.1 15% 71.1 (11%) 121.2 (15%) 110.7 (19%) 501.1 (6%)
ROW total sales 129.8 (30%) 51.3 (45%) 83.9 (13%) 72.3 (26%) 337.3 (29%)
Total sales(3) 1,336.5 (4%) 504.1 (17%) 858.9 (11%) 850.0 (12%) 3,549.5 (10%)
Year ended 31 August 2022 ( )
P1(1) YOY% P2(1) YOY% P3(1) YOY% P4(1) YOY% 2021/22 YOY%
£m
UK total sales 645.2 13% 250.3 (2%) 431.8 4% 435.5 6% 1,762.8 7%
EU total sales 390.2 (3%) 187.2 (3%) 294.0 (5%) 298.6 6% 1,170.0 (1%)
US total sales 172.6 7% 80.1 13% 141.9 21% 136.8 18% 531.4 14%
ROW total sales 185.1 (20%) 93.4 1% 96.4(2) (33%) 97.4 (30%) 472.3 (22%)
Total sales(3) 1,393.1 2% 611.0 -% 964.1(2) (2%) 968.3 2% 3,936.5 1%
Year ended 31 August 2021
P1(1) YOY% P2(1) YOY% P3(1,4) YOY% P4(1,4) YOY% 2020/21 YOY%
£m
UK total sales 571.3 35% 254.5 46% 415.9 85% 410.3 5% 1,652.0 36%
EU total sales 400.6 18% 193.8 22% 310.1 33% 280.8 (6%) 1,185.3 15%
US total sales 161.7 12% 71.2 8% 117.5 25% 115.8 4% 466.2 12%
ROW total sales 230.5 16% 92.3 1% 144.5 2% 139.7 (19%) 607.0 1%
Total sales(3) 1,364.1 23% 611.8 25% 988.0 43% 946.6 (3%) 3,910.5 20%
(1) Periods are as follows:
P1: four months to 31 December
P2: two months to 28/29 February
P3: three months to 31 May
P4: three months to 31 August at year-end 2021 and 2022, period to 3 September
in 2023
(2) In the tables above RoW and Group total sales for P3 have been restated.
This restatement relates to the removal of the £19.3m gain on RUB hedges,
which was reported as revenue at P3 but subsequently reallocated to other
income at year-end 2022.
(3) Includes retail sales, wholesale and income from other services comprising
delivery receipt payments, marketing services and commission on
partner-fulfilled sales.
(4) P3 is restated to reflect only March, April, and May. P4 has been restated
to include June.
Appendix 2 - Total sales growth by period at constant currency, including
Russia
Period to 3 September 2023
£m P1(1) P2 (1) P3 (1) P4 (1) 2022/23
YOY% YOY% YOY% YOY% YOY%
UK total sales (8%) (15%) (14%) (13%) (12%)
EU total sales 6% (12%) (7%) (4%) (3%)
US total sales (2%) (20%) (20%) (16%) (13%)
ROW total sales (31%) (46%) (14%) (25%) (30%)
Total sales(3) (6%) (20%) (13%) (12%) (11%)
Year ended 31 August 2022
P1(1) P2 (1) P3 (1) P4 (1) 2021/22
£m YOY% YOY% YOY% YOY% YOY%
UK total sales 13% (2%) 4% 6% 7%
EU total sales 2% 1% (2%) 9% 2%
US total sales 11% 12% 15% 4% 10%
ROW total sales (15%) 2% (33%)(2) (31%) (20%)
Total sales(3) 5% 1% (2%)(2) 1% 2%
Year ended 31 August 2021
P1(1) P2 (1) P3 (1,4) P4 (1,4) 2020/21
£m YOY% YOY% YOY% YOY% YOY%
UK total sales 35% 46% 85% 5% 36%
EU total sales 17% 20% 34% (7%) 15%
US total sales 16% 13% 40% 15% 21%
ROW total sales 20% 9% 10% (14%) 6%
Total sales(3) 24% 26% 47% (1%) 22%
( )
( )
( )
(1) Periods are as follows:
P1: four months to 31 December
P2: two months to 28/29 February
P3: three months to 31 May
P4: three months to 31 August at year-end 2021 and 2022, period to 3 September
in 2023
(2) In the tables above RoW and Group total sales for P3 have been restated.
This restatement relates to the removal of the £19.3m gain on RUB hedges,
which was reported as revenue at P3 but subsequently reallocated to other
income at year-end 2022.
(3) Includes retail sales, wholesale and income from other services comprising
delivery receipt payments, marketing services and commission on
partner-fulfilled sales.
(4) P3 is restated to reflect only March, April, and May. P4 has been restated
to include June.
Appendix 3 - Total adjusted(1) sales growth by period at constant currency,
excluding Russia
Period to 3 September 2023
£m P1(2) P2 (2) P3 (2) P4 (2,5) 2022/23 (5)
YOY% YOY% YOY% YOY% YOY%
UK total sales (9%) (15%) (15%) (16%) (13%)
EU total sales 6% (12%) (8%) (7%) (4%)
US total sales (2%) (20%) (21%) (19%) (14%)
ROW total sales(4) (10%) (16%) (14%) (28%) (16%)
Total sales(3) (4%) (15%) (14%) (15%) (11%)
Year ended 31 August 2022
P1(2) P2 (2) P3 (2) P4 (2) 2021/22
£m YOY% YOY% YOY% YOY% YOY%
UK total sales 13% (2%) 4% 6% 7%
EU total sales 2% 1% (2%) 9% 2%
US total sales 11% 12% 15% 4% 10%
ROW total sales(4) (7%)(6) (4%)
Total sales(3) 2%(6) 6%
( )
( )
(1) Adjusted sales are reported sales excluding non-underlying items
(2) Periods are as follows:
P1: four months to 31 December
P2: two months to 28/29 February
P3: three months to 31 May
P4: three months to 31 August at year-end 2021 and 2022, period to 3 September
at 2023
(3) Includes retail sales, wholesale and income from other services comprising
delivery receipt payments, marketing services and commission on
partner-fulfilled sales.
(4) Calculation of metrics, or movements in metrics, on an ex-Russia basis
involves the removal of Russia from H1 FY22 performance following the decision
to suspend trade in Russia on 2 March 2022.
(5) LFL growth calculated by removing the impact of the 3 extra trading days
in FY23
(6) In the tables above RoW and Group total sales for P3 have been restated.
This restatement relates to the removal of the £19.3m gain on RUB hedges,
which was reported as revenue at P3 but subsequently reallocated to other
income at year-end 2022.
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