Source: Sharecast
Despite the top-line miss, Asos reported strong progress on profitability, with adjusted underlying earnings up more than 60% year-on-year and expected to land towards the lower end of its £130m to £150m guidance range.
Profit per order rose by around 30%, while gross margins improved by roughly 350 basis points, driven by the rollout of its new commercial model. Asos also said it had delivered "a modest free cash inflow" in FY25, ahead of broadly neutral guidance.
Looking ahead to FY26, Asos said it remained confident in delivering adjusted underlying earnings and free cash flow in line with consensus forecasts, supported by further margin expansion and ongoing cost discipline.
Asos reiterated its medium-term target for sustainable EBITDA growth to a margin of around 8%, ahead of capex, interest, tax and leases, and said it expects a return to revenue growth alongside continued margin improvement towards 50%.
Peel Hunt said: "ASOS has confirmed that FY25 adjusted EBITDA will be at the lower end of the £130-150m guided range, which would imply a c.10% downgrade to our forecasts and consensus. For FY26, ASOS is comfortable with current adjusted EBITDA consensus of c.£173m, which sits c.£10m below our current estimate. As ever, ASOS continues to make strong progress on gross margins (+350bps), unit profitability, and cost savings, taking EBITDA margins over 5%.
"With the business now coming from a strong base, the focus will move to driving customer engagement and revenues; we note that according to our estimates, FY25 sales will be down c.12% YoY, below the bottom of the range. Demonstrating relevance and growth will be key to investor sentiment and is likely to be the focus at the company's upcoming announcements."
As of 0815 BST, Asos shares were down 9.22% at 266p.
Reporting by Iain Gilbert at Sharecast.com