ASOS delivered a full-year trading update on Tuesday and while it didn’t give much away in terms of what’s happening on the monetary front (but sales have been lower than expected and adjusted EBITDA is at the lower end of its forecast) it did show that progress is being made at the online fashion retail giant.
ASOS
So for FY25, its gross profit margin rose around 350bps, “driven by the successful commercial model implementation, focusing on higher full-price sales mix and lower markdown activity”.
Its Test & React model reached more than 20% of own-brand sales, and flexible fulfilment reached 10% of third-party GMV, “enabling it to bring customers the best, most relevant product faster and more efficiently”.
Efficiencies were delivered via “meaningful improvements particularly across its supply chain, through a series of wide-ranging initiatives including reducing the causes of unnecessary returns, renegotiation of key distribution contracts and optimising its warehouse footprint, leading to significant multi-year savings in FY26 and beyond”.
Distribution and warehousing cost-to-serve is down around 3ppts over the last two years, with further opportunities identified.
For the year, its adjusted EBITDA is up over 60%, but is still expected to be towards the lower end of the £130 million to £150 million guided range, “driven by higher gross margin and continued cost efficiency, resulting in an adjusted EBITDA margin of more than 5%, in line with consensus”.
During H2, it said it “delivered meaningful cost actions which, while not delivering a material benefit during the period, have permanently lowered [its] exit cost base, positioning the company to realise significant annualised savings in FY26”.
The profitability improvements were delivered despite lower sales as it saw lower-than-expected GMV, with group revenue “slightly below consensus estimates, as the company continues to focus on higher quality sales against a soft consumer backdrop”.
But profit per order rose by around 30%, “underscoring the fundamental reset in unit economics achieved through focusing on creating sustainably profitable relationships with customers”.
Revamp programme
This all came as the company said that in FY25, it “made significant strategic progress, focused on building sustainably profitable and resilient foundations”.
But before we get to the details of that, it’s worth pointing out the changes it has gone through over the past few years.
Its revamp programme has three phases: phase one has seen successfully clearing its excess stock, reducing its warehouse footprint and strengthening the balance sheet. For phase two it’s reshaped the business towards a “stronger, more profitable underlying economic model that ASOS can grow in a sustainable fashion”.
And phase three is the “re-engaging customers” element of its revamp. “With stronger foundations in place, the final phase is regaining the hearts and minds of customers at scale, starting with its core customers in its core markets,” it said.
As it entered FY25, ASOS had essentially completed phase one, having significantly reduced and comprehensively refinanced its net debt at the beginning of the year, announcing further efficiencies to its global distribution network with the mothballing of its Atlanta fulfilment centre, and reducing its inventory position by more than 60% since the end of FY22 (from £1.1 billion to around £400 million).
Having concurrently scaled its new commercial model and rebuilt its variable and fixed cost base — stage two of this process — it had planned to shift gears to the final stage earlier in FY25.
But it said that “more opportunity to reduce fixed costs and drive further variable cost optimisation were explored and the business focus remained on securing even stronger profitability foundations that will deliver further material improvements to ASOS’ cost base in FY26 and beyond”.
Over the summer it pivoted to the final phase of its transformation, launching the start of a series of new customer experiences – including its exclusive Adidas x ASOS collaboration, the ASOS.WORLD loyalty programme in the UK, and expanding Topshop and Topman through new channels “with positive early signs on customer engagement”.
In FY26, it added that “building customer love is the primary focus for [its] energy, investment and resources. [It] enters this exciting phase of its transformation with a business model, stock profile and underlying cost base that positions it to succeed, with more new customer experiences to come”.
It all adds up to being “confident” that for the current year it will achieve adjusted EBITDA and free cash flow in line with consensus forecasts, supported by further gross margin improvement towards around 50% and continued cost efficiency.
It reiterated its medium-term guidance for sustainable adjusted EBITDA growth to a margin of around 8%, sustainably ahead of capex, interest, tax and leases as well as expecting a return to revenue growth and improving gross margin towards around 50%.
Artificial intelligence (AI) continues its march to transform businesses’/consumers’ lives with customer advocacy platform Mention Me launching ‘AI Discovery IQ’, a free-to-use tool that “helps brands reach target consumers in the new age of generative AI search”.
Kirill KUDRYAVTSEV / AFP/Archives
It claims to allow brands to “instantly audit how discoverable they are within popular AI systems” such as ChatGPT, Claude, Gemini and Perplexity.
According to Mention Me, 62% of UK consumers now turn to generative AI tools for product recommendations, brand discovery and comparisons, “bypassing traditional search engines entirely [so] businesses are under pressure to respond to this behaviour change,” said the platform’s CEO Wojtek Kokoszka whose platform works with firms including Charlotte Tilbury, Huel and Puma, “helping marketing teams to boost consumer awareness and sales”.
With AI, it says the modern customer journey, powered by natural language prompts instead of outdated keyword strings, means consumers are 4.4 times more likely to convert if they find a brand through a large language model (LLM).
“The rise of ‘agent-mode’ assistants and AI-driven voice search has pushed brands into a new world of digital visibility. Despite this, most brands have little to no insight into how they appear in AI-generated answers”, said Kokoszka.
AI Discoverability IQ claims to give brands an overall LLM discoverability score, specific details on areas such as technical website elements, content and structured data, and actionable recommendations to improve their AI discoverability.
Its tool generates “measurable, trackable outputs” like AI Visibility Score, brands’ prompt-based results, and a side-by-side comparisons with their competitive set. This means brands “can react quickly to improve their discoverability scores” with Mention Me’s wider suite of products and unique first-party data.
It’s also “innovating and evolving” its platform to include more capabilities, such as the ability to benchmark against competitors, to drive further improvements for marketing leaders in the age of AI.
Mention Me CMO Neha Mantri said: “AI Discoverability is not yet a named practice within most marketing teams; the same way SEO wasn’t in the early 2000s. But when up to 31% of consumers say they’re more likely to trust responses from generative AI than traditional search results, this needs to change. Mention Me is naming the problem and providing a solution at just the right time.”
A host of celebrities and high-end brands have donating goods to ensure Savile Row’s latest annual ‘Pop-Up Crisis’ store will continue to support the Crisis charity event that has so far raised over £650,000 since 2018.
Image: Crisis charity
Across 8-13 December, the pop-up store at 18-19 Savile Row in London’s Mayfair will sell a curated selection of designer clothing, past stock and samples from luxury brands.
Celebs donating goods include Rosie Huntington-Whiteley, Naomie Harris, David Gandy, Jarvis Cocker, Louis Partridge, Jamie Redknapp and Emma Corrin, among others, for a week-long event and raffle with all proceeds going to help end homelessness across Britain.
Hosted by landlord The Pollen Estate, the temporary shop is also selling designer goods donated by Savile Row tailors including Mr Porter, Wales Bonner, Crockett & Jones and many other luxury brands from Barbour, Tod’s to Manolo Blahnik and Watches of Switzerland Group.
This year, celebrity model and fashion entrepreneur David Gandy will also be curating an exclusive online edit on shopfromcrisis.com, including donations from his own wardrobe as well as items from friends including Redknapp’s brand Sandbanks, Hackett and Aspinal of London.
Gandy said: “Having supported Crisis for a number of years, I’m delighted to have had the opportunity to curate my own online edit this year with the help of some of my close friends. It means a lot to know that donations from my own wardrobe are going towards such an important cause. Whether you’re looking for the perfect Christmas gift or to treat yourself, your purchase can help make a real difference to people facing homelessness this Christmas.”
Liz Choonara, executive director of Commerce and Enterprise at Crisis, added: “Pop-Up Crisis is such an iconic event in the Crisis calendar and one that we look forward to every year. We’re thrilled to be partnering with the team once again for another week celebrating the iconic craftsmanship and style of Savile Row – with all proceeds going towards our crucial work to end homelessness.”
Specialist outdoor clothing producer Dryrobe has won a trademark case against a smaller label. The win for the business, which produces waterproof towel-lined robes used by cold water swimmers, means the offending rival must now stop selling items under the D-Robe brand within a week.
Image: Dryrobe
A judge at the high court in London ruled the company was guilty of passing off its D-Robe changing robes and other goods as Dryrobe products and knew it was infringing its bigger rival’s trademark reports, The Guardian newspaper.
The company said it has rigorously defended its brand against being used generically by publications and makers of similar clothing and is expected to seek compensation from D-Robe’s owners for trademark infringement.
Dryrobe was created by the former financier Gideon Bright as an outdoor changing robe for surfers in 2010 and became the signature brand of the wild swimming craze.
Sales increased from £1.3 million in 2017 to £20.3 million in 2021 and it made profits of £8 million. However, by 2023 sales had fallen back to £18 million as the passion for outdoor sports waned and the brand faced more competition.
Bright told the newspaper the legal win was a “great result” for Dryrobe as there were “quite a lot of copycat products and [the owners] immediately try to refer to them using our brand name”.
He said the company was now expanding overseas and moving into a broader range of products, adding that sales were similar to 2023 as “a lot of competition has come in”.
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