ASOS Shares Fall: Restructures for Profitability, Revenue Slides, EBITDA Growth Expected in FY26

Global online fashion destination ASOS Plc (LON: ASC) reported its final results for the 52 weeks ending August 31, 2025, revealing a period of strategic restructuring aimed at bolstering profitability amidst declining revenue.

While revenue took a hit, the company's focus on operational efficiency and a new commercial model appears to be gaining traction, setting the stage for improved performance in the coming fiscal year. However, ASOS shares are down over 9% on Friday morning.

Headline Numbers:

• Adjusted Group Revenue: £2,464.8 million, down 14% year-over-year.
• Adjusted Gross Margin: 47.1%, a substantial 370 basis points increase year-over-year.
• Adjusted EBITDA: £131.6 million, a 51.5% increase year-over-year.
• Net Debt: Reduced to £(184.7) million, a £112.4 million improvement year-over-year.

Despite the revenue decline, the company's ability to significantly improve gross margins and EBITDA demonstrates the effectiveness of its turnaround strategy. ASOS's focus on full-price sales, reduced markdown activity, and efficient operations contributed to this profitability surge. The balance sheet also reflects positive change, with a considerable reduction in net debt, enhancing the company's financial flexibility.

ASOS has been actively managing its inventory levels, successfully reducing stock by approximately 60% since FY22. This inventory discipline, coupled with warehouse rationalization efforts, has led to significant fixed cost savings and improved operational efficiency. Furthermore, the refinancing of the asset-backed loan facility has provided additional liquidity headroom and reduced annual cash interest costs.

Driver Breakdown:

• New Commercial Model: Enables gross margin expansion through higher full-price sales and lower markdown activity.
• Strategic Models Scaling: Test & React (T&R) successfully scaled to more than 20% of own brand sales, reducing own brand production times.
• Operational Efficiencies: Supply chain costs down approximately 20% year-over-year, driven by various initiatives.

“ASOS has always stood for innovation, energy and fashion that excites. When I became CEO at the end of FY22, it was clear we needed to reset the business so we could deliver that promise for our customers again. Three years later, the turnaround is well progressed: we've rebuilt our foundations, sharpened our focus, and we're ready to reclaim our place as the most exciting destination for fashion-loving customers.”

Looking ahead, ASOS anticipates GMV to show an improving trajectory throughout FY26, with GMV performance expected to be 3-4 percentage points ahead of revenue performance, driven by the growth of Flexible Fulfilment models.

The company expects further gross margin improvement of at least 100 basis points, reaching 48% to 50%. Furthermore, ASOS projects adjusted EBITDA growth to £150 million to £180 million, supported by continued cost discipline and margin expansion.