ASOS (ASC) Trading Update summary

Strategic transactions and joint venture

• Entered a joint venture with Heartland, selling a 75% stake in Topshop and Topman for £135 million, valuing the brands at £180 million; ASOS retains a 25% stake and can sell an additional 5% for £9 million.

• Net proceeds of about £118 million will strengthen the balance sheet, with completion expected in Q4 2024, subject to antitrust approvals.

• ASOS will continue to design and sell Topshop/Topman online, relaunch topshop.com within six months of completion, and control wholesale in the UK and North America under a 10-year exclusive license, extendable to 25 years.

• The JV enables ASOS to monetize value now while retaining future upside, leveraging Heartland’s expertise for global expansion; Nordstrom retains a minority interest.

• The transaction is expected to negatively impact FY25 EBITDA by £10–20 million due to royalties but become EBITDA accretive over time.

Refinancing and capital structure

• Launched a £250 million convertible bond due 2028 and a partial repurchase of the £500 million bond due 2026.

• Amended and extended the Bantry Bay facility to May 2027, with a £50 million term loan switched to a revolving facility, reducing blended interest rate and a 12-month extension option.

• The revolving credit facility remains at £75 million, with a £50 million accordion, and the term loan reduces from £200 million to £150 million.

• Facilities are secured by charges over assets and include standard financial covenants and events of default.

• Net proceeds from the JV, new convertible offering, and cash will fund the bond repurchase, aiming to reduce net debt, extend debt maturity, and increase financial flexibility.

Trading and operational performance

• Adjusted EBITDA for FY24 expected at the top end of consensus, with sales slightly below guidance; other guidance remains unchanged.

• Progress on the Back to Fashion strategy, focusing on profitable sales, sustainable growth, faster speed to market, and scaling partner fulfilment.

• Test and React program on track to reach 10% of own brand sales by year-end; Partner Fulfills exceeded targets, now over 4% of GMV.

• AI-driven improvements have reduced returns rates and enhanced customer experience.

• ASOS plans to relaunch Topshop.com within six months of transaction completion.