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Highlights
- ASOS reported a 60% year-on-year increase in adjusted EBITDA to £132m.
- Adjusted gross margin improved by 370bps to over 47%.
- The company strengthened its balance sheet, reducing net debt by over £110m, while FY25 free cash flow reached £14m.
ASOS Plc (LSE:ASC), the global online fashion retailer, has released its final results for the 52 weeks ending 31 August 2025, reporting a marked improvement in profitability and operational efficiency. The company’s strategic initiatives, including a new commercial model, Flexible Fulfilment (FF) rollout, and accelerated Test & React (T&R) processes, contributed to significant margin expansion and a renewed focus on customer engagement. Despite softer sales volumes, ASOS delivered positive financial outcomes and strengthened its balance sheet, setting the stage for continued growth in FY26.
Gross Margin Expansion Through Strategic Models
ASOS achieved an adjusted gross margin of over 47%, up 370bps year-on-year, driven by a higher full-price sales mix and reduced markdown activity. The company’s Test & React model, now accounting for more than 20% of own-brand sales, helped accelerate trend adoption, while production times for own-brand items decreased by roughly 30% YoY. The Flexible Fulfilment model also scaled, covering more than 10% of third-party GMV, including the transition of Inditex to an AFS model, improving product availability and working capital management.
Operational Efficiencies Drive Cost Savings
Operational improvements contributed to a roughly 20% reduction in supply chain costs, including initiatives to reduce unnecessary returns, renegotiate distribution contracts, and optimise warehouse operations. These measures, along with further H2 FY25 cost actions, positioned ASOS to achieve significant annualised savings in FY26, creating reinvestment capacity. Adjusted EBITDA increased more than 60% YoY to £132m, with a 250bps margin improvement to 5.3%, despite lower-than-expected GMV.
Customer Engagement and Financial Strength
Despite a decline in total customer volumes, retention among profitable customers improved, with higher average spend and profitability. Early FY26 trends show new customer growth of approximately 10% YoY in the UK. The balance sheet was strengthened through convertible bond refinancing, the TSTM joint venture, and term loan refinancing, providing an additional £87.5m liquidity headroom. Free cash flow for FY25 was £14m, driven by EBITDA growth and capital efficiency.
FY26 Outlook
ASOS expects GMV to improve throughout FY26, with a 3–4ppt advantage over revenue performance due to FF growth. Further gross margin expansion of at least 100bps is forecast, alongside adjusted EBITDA of £150–180m. Free cash flow is expected to be broadly neutral, while the company continues to focus on sustainable, profitable growth and efficient capital allocation.
ASC shares were trading at GBX 243.50 per share during trading session on 21 November 2025.
