ASOS (ASC) H2 2024 earnings summary

Executive summary

• Completed a two-year transformation focused on reducing excess stock, improving operational agility, and building a sustainable, profitable business model; inventory down 50% from FY22 and old stock down 75%.

• Achieved a 50% reduction in stock value to GBP 520 million, with 80% of inventory now less than six months old, releasing GBP 143 million in cash.

• Launched new commercial models like Test and React (10% of own brand sales) and Partner Fulfils (5% of partner brand GMV), aiming to double both in FY25.

• Strengthened customer engagement through improved marketing efficiency, influencer partnerships, and new digital features.

• Entered a joint venture for Topshop/Topman and refinanced debt, reducing net debt by GBP 130 million and improving financial flexibility.

Financial highlights

• FY24 sales declined 16% year-over-year due to lower intake and stock clearance actions; adjusted sales fell 16.4% to GBP 2,896 million.

• Adjusted EBITDA reached GBP 80.1 million, at the top end of consensus, despite sales decline.

• Gross margin fell 80 basis points year-over-year to 43.4%, mainly from heavy discounting to clear old stock.

• Free cash flow was GBP 38 million, a GBP 250 million improvement year-over-year.

• Net debt reduced by GBP 22 million to GBP 297 million at year-end; closing cash exceeded GBP 390 million.

Outlook and guidance

• FY25 guidance: gross margin to improve by at least 300 basis points to over 46%; adjusted EBITDA expected to grow at least 60% to GBP 130–150 million.

• Revenue growth expected in line with consensus range (-9% to +6%); free cash flow to be broadly neutral.

• Capex planned at approximately GBP 130 million; cash interest about GBP 35 million, P&L interest about GBP 80 million.

• Medium-term ambition to rebuild EBITDA margins to 8%+ and gross margin toward 50%, with EBITDA sustainably ahead of capex, interest, tax, and leases.