ASOS announced that it had made strategic progress in FY ’25 despite lower-than-expected sales, as the online fashion retailer continued to focus on building a profitable and resilient foundation through its multi-year turnaround strategy.
The company said its financial performance for the year reflected the success of its strategic initiatives, with gross profit margins rising by 350 basis points year-on-year. Operational and cost efficiencies also delivered meaningful improvements, particularly across the supply chain.
However, profitability gains were achieved against a backdrop of weaker sales, with group revenue coming in slightly below consensus estimates. The retailer emphasised its focus on higher-quality sales in what it described as a “soft consumer backdrop”. Most analysts had forecast a year-on-year group revenue decline of 8.4%. Adjusted earnings before interest, tax and other costs are expected to have increased by more than 60% year-on-year.
ASOS reported that it had cleared excess stock during the year, reduced its warehouse footprint, and strengthened its balance sheet to improve capital allocation. It has also transitioned to a more agile operating model, reshaping product design, buying, stock management and returns to drive healthier full-price sales.
As part of this shift, the company undertook a disciplined review of its customer proposition by market, renegotiated key supplier contracts, and restructured its fixed cost base to support its new model. These changes, it said, were aimed at establishing a higher gross margin and creating a stronger, more sustainable economic model.
The retailer stated that it had “essentially completed phase one” of its turnaround plan as it entered FY ’25, having significantly reduced and refinanced net debt earlier in the year and cut inventory by more than 60% since FY ’22, from US $ 1.35 billion to US $ 538 million. Further opportunities are now being explored to lower fixed costs and optimise variable expenses, with an eye on deeper cost base improvements in FY ’26 and beyond.
Over the summer, ASOS moved into the final phase of its transformation: re-engaging customers. New initiatives included an exclusive adidas x ASOS collaboration, the launch of the ASOS.WORLD loyalty programme in the UK, and the expansion of Topshop and Topman across new channels, which the company said had shown positive early signs of engagement.
Looking ahead, ASOS indicated that “building customer love” would be the primary focus for investment, energy and resources in FY ’26. The company said it was entering this next stage of transformation with a business model, stock profile and cost base that positioned it for success, with more new customer experiences planned.
The update comes shortly after the appointment of Ben Blake as Executive Vice President for Customer & Commercial, a newly created role that consolidates customer and commercial functions. The move is intended to sharpen ASOS’s focus on delivering a seamless and engaging customer journey, while aligning commercial performance with its long-term strategy for sustainable and profitable growth.
