2021 Annual Report (Report)

ASOS

REIMAGINED

ASOS Plc Annual Report and Accounts 2021

We are an online retailer for fashion- loving 20-somethings around the world.

Through our market-leading app and web experience, ASOS customers can shop a curated edit of c.90,000 products, sourced from 850+ of the

Strategic Report

Governance Report

Financial Statements

Chair's statement

best global and local third-party brands, alongside our mix of fashion-ledin-house labels including ASOS DESIGN, ASOS EDITION, ASOS 4505, Collusion, Reclaimed Vintage, Topshop, Topman, Miss Selfridge and HIIT.

We are mission-led,purpose-driven and guided by our values. We believe in a world where you have the freedom to explore and express yourself without judgement, no matter who you are or where you're from.

We aim to deliver a truly frictionless experience, with an ever-greater number of payment methods and hundreds of local delivery and returns options, dispatched from state- of-the-art fulfilment centres in the UK, US and Germany.

All built to deliver on our purpose - to give our customers the confidence to be whoever they want to be.

Strategic Report			Governance Report			Financial Statements
01	Chair's statement	45	Board of Directors	88	Independent Auditors' Report to the
02	Chief Operating Officer's statement	48	Corporate Governance Report				members of ASOS Plc
04	A year in review	55	Audit Committee Report	95	Consolidated Statement of Total
06	Operational & financial review	62	Nomination Committee Report				Comprehensive Income
10	Performance by market	64	Directors' Remuneration Report	96	Consolidated Statement of Changes in Equity
12	Outlook	83	Directors' Report	97	Consolidated Statement of Financial Position
14	Our business model	86	Statement of Directors' Responsibilities	98	Consolidated Statement of Cash Flows
16	Our strategic priorities													99	Notes to the Financial Statements
20	Key performance indicators													126	Company Statement of Changes in Equity
22	Our brands													127	Company Statement of Financial Position
24	Our values													128	Company Statement of Cash Flows
26	Our people													129	Notes to the Company Financial Statements
30	Fashion with Integrity													133	Adjusted Performance Measures (APMs)
34	Stakeholder engagement													134	Five-Year Financial Summary (unaudited)
36	Managing risk at ASOS													136	Company information

1. Principal risks and opportunities

1. Long-termviability statement

This has been a strong year for ASOS. Despite challenging circumstances, the talent, passion, resilience and commitment of our Executive team and our ASOSers has shone through and helped us deliver the strong results we have published. Revenues rose to £3,910.5m, delivering an adjusted pre-tax profit of £193.6m, a rise of 22%¹ and 36% respectively.

Over the last three years we have made significant progress, delivering 60% growth in revenues, improved profitability and a strengthened balance sheet. We have also bolstered the management team and improved ASOS' operational capabilities and resilience. As a result, we enter the coming year well placed against the backdrop of difficult conditions that we and all businesses are facing. At the same time, however, we recognise that there is more to do to accelerate the pace and intensity of our commercial execution. We know that our performance in the next 12 months is likely to be constrained by demand volatility and global supply chain and cost pressures. But we have started the new financial year confident that we have an unrivalled collection of brands that resonates with our core 20-something customers, the right technology underpinning our platform, the right strategy in place and a strong management team, leading more than 3,000 ASOSers who have an unrivalled passion for fashion and what it means in the lives of our customers.

Investing in ASOS

ASOS was born online, a pioneer in its field, and quickly became the fashion destination for 20-somethings in the UK. Over 21 years, we have benefited from our first-mover advantage to become a market leader with a sustainable, profitable and growing market share. As in any market, the dynamics have constantly changed. For ASOS, it has been the behaviours and needs of our core customers. Our customers increasingly want to express themselves individually rather than follow trends, seeking out brands that feel authentic and have a purpose. To meet these needs, the past

12 months saw significant investment within ASOS, including: our first major acquisition - the Topshop brands - in February 2021, the successful delivery of our retail planning

and merchandising system (TGR), opening our new UK warehouse in Lichfield, and the automation of our US fulfilment centre in Atlanta.

At the same time, we tested our pricing and marketing strategies, reviewing and learning from the results to ensure that we continue to give our customers exactly what they want, when they want it, at

a compelling price. Taken together, the result is a well-controlled global online retail operation that performs increasingly efficiently and with agility and resilience - qualities that have proven themselves invaluable over the last year and will continue to serve us well as we move forwards.

Stepping down

This is my last statement as Chair, before stepping down in November. I have been immensely proud to have been part of the ASOS story over the last three years and of the tremendous success we have achieved. ASOS' management and Board have spent considerable time over recent months developing and validating a clear strategic plan to accelerate international growth, building on ASOS' undoubted strength in the UK. This will allow ASOS to deliver against the ambition to be one of the few truly global leaders in online fashion retail. Under the plan, we are committing to deliver annual revenues of £7bn and an EBIT margin of at least 4% within three

to four years, which will be achieved by accelerating our international growth, adding at least £1bn to ASOS' annual own-brand sales and strengthening the ASOS Platform.

Key to the delivery of this plan is ensuring that we have the right leadership in place for the next phase to ensure we deliver against our clear strategic intent.

I want to thank Nick Beighton, who has stepped down as Chief Executive Officer (CEO) after 12 years with ASOS and six as CEO. He has played a pivotal role in the development of ASOS over the past

12 years. He joined a start-up business and leaves an internationally-focused business with over 26m customers in 200 markets around the world. A large part of his legacy is in how he has led the industry in putting

sustainability at the heart of ASOS with our Fashion with Integrity programme.

We wish Nick all the best for the next phase of his career.

I hand over the Chair to Ian Dyson, who has been our Senior Independent Non-executive Director since 2013. Ian is the right candidate to oversee the next phase of growth, working with the existing Executive team to support the delivery of the global growth strategy. In addition, Jørgen Lindemann is joining the Board as a Non-executive Director on 1 November 2021, bringing deep experience in leading digital-first businesses. Jørgen is currently the Chair of Miinto, the Danish-based online fashion marketplace, and was formerly the President and CEO of Modern Times Group (MTG), the Swedish-based digital entertainments business, and recently stood down from the Board of Zalando following five-years as a Non-executive Director. ASOS is also well-advanced in the search for an experienced Non-executive Director to join the Board and take over the roles of Audit Committee Chair and Senior Independent Director from Ian Dyson.

Finally, I'd like to take this opportunity to wish the team at ASOS, all our suppliers and brand partners, our valued customers and our investors the very best for

the future.

Adam Crozier

Chair

1 On a constant currency basis.

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Annual Report and Accounts 2021

Chief Operating Officer's statement

Strategic Report

Governance Report

Financial Statements

ASOS has achieved a great deal over the past year. Against a backdrop of

continued challenges due to the COVID-19 pandemic, our

Mat Dunn	ASOS has achieved a great deal over the past year.
Chief Operating	Against a backdrop of continued challenges due to
Officer & Chief	the COVID-19 pandemic, our strategy has delivered
Financial Officer	exceptional results.
	Over the last 12 months, our focus has been on
	delivering what our core fashion-loving20-something
	customers want, while protecting our people,
	supporting our partners and investing in our long-term
	future. We accelerated active customer growth,
	which helped drive sales, and invested in enhancing
	our customer experience. Our previous and ongoing
	investment in distribution and technology proved
	well-targeted and timely - giving us greater flexibility
	and agility to respond to changes, such as by helping
	us improve our short lead time product offers and
	change supply lines swiftly, in response to reduced
	freight capacity from South-East Asia.
	One of the real highlights of the year was the
	successful acquisition of the Topshop brands, which
	marked an acceleration of our multi-brand platform
	strategy. ASOS had already been central to driving
	the growth of these iconic British brands online,
	and we are extremely proud that they are now

under our ownership. Since we completed the deal in February 2021, we have more than delivered against our promise, developing and enhancing the brands further using our design, marketing, technology, logistics and 20-somethings expertise. We integrated and relaunched the brands in three weeks - with one-off costs of just £10.5m, half the cost originally expected. Since then, we have announced a strategic partnership with Nordstrom, to drive the growth of these iconic brands in North America, also paving the way for ASOS' own-brands to be sold in Nordstrom stores and online.

More widely, we have continued to accelerate our offering on our multi-brand platform - we sell more than 850 brands, have 26.4m active customers and our website gets 60m visits a week - making it among the best in the world. We operate across the globe, in 10 languages and offer 19 different payment methods. Customers get next-day delivery or express delivery in every key country, and we provide four-day standard delivery in all our major markets. These aren't just numbers - these are the standards by which our customers measure us and they are what drives new and repeat business. A reflection of our achievements is not only seen in our increased sales, but in our higher customer satisfaction scores, and looking ahead, we will continue to focus on the customer experience to drive further growth.

Against this backdrop, in October 2021, we set out the headlines of the next phase of the ASOS strategy. We are going to continue our focus on serving fashion‑ loving 20-somethings - a consumer group with a Total Addressable Market of £430bn in the UK, US, Europe and our core RoW territories, meaning we see significant further growth potential. We have set medium-term targets which will see the Group become a business with £7bn of annual revenues, delivering an EBIT margin of at least 4% within three to four years. We will significantly increase our marketing investment, particularly in international markets, and we will have capital expenditure in the range of £200m to £250m a year.

We will deliver on this plan by:

• Accelerating international growth, including doubling the size of the combined US and Europe business;
• Adding at least £1bn to our annual own-brand sales; and
• Strengthening the ASOS Platform with the launch of 'Partner Fulfilment', targeting c.5% of Gross Merchandise Value (GMV).

As part of the drive towards this, our new warehouse in Lichfield opened in August 2021 and we continue to improve the service for our US customers with further automation at our US fulfilment centre in Atlanta. These enhancements will increase our annual supply chain capacity to £6bn in sales by 2023.

£3,910.5m

Revenue 2021

(2020: £3,263.5m)

45.4%

Gross margin 2021 (2020: 47.4%)

Our relentless focus on flawless delivery for customers will underpin our growth, as will constantly refreshing how we connect with them. We're also committed to continuing to improve how our products are presented, with new styling and doubling down on our influencer campaigns over the next 12 months. We also look forward to our customers reconnecting with formalwear as their lives return to normal.

As Adam has outlined, we have made a number of leadership changes as we prepare for delivery of our next phase of global growth. I am delighted to be taking on the role of Chief Operating Officer, which is an addition to my role as Chief Financial Officer, and

will lead ASOS on a day-to-day basis ahead of the appointment of a new Chief Executive Officer. I would like to thank Nick Beighton for his contribution to ASOS over the past 12 years and his guidance to me since

I joined the business.

On behalf of the Board I would also like to thank Adam Crozier, who steps down as Chair in November after three years. His guidance and wise counsel to the whole Executive team has been invaluable, and in leading our Board he has made a significant contribution to ASOS.

All of this positions us well for the future and the delivery of continued growth, but growth without regard to the planet's wellbeing is unsustainable. For this reason, we have refreshed and enhanced our commitment to sustainability - what we call our Fashion with Integrity (FWI) programme. FWI has been a cornerstone of how we think, work and act for a decade. Within FWI, we aim to reassure our customers that they need have no concerns over the ethics of shopping with us. Now we have launched our FWI 2030 programme, with enhanced commitments focused on four ambitious goals: Be Net Zero, centred around our carbon emissions; Be More Circular, about transitioning to more circular systems; Be Transparent, focused

on transparency and human rights; and Be Diverse, encompassing diversity, equity and inclusion.

strategy has delivered exceptional results.

As we focus on our mission to become the world's number one destination for fashion-loving20-somethings, these goals will help us to be a truly global retailer in

a responsible and sustainable way. We also recognise that nothing can be achieved without the right people. We know that over the past 18 months, our ASOSers' lives have been turned upside down, yet their resilience and commitment have allowed us to regain our growth momentum and I would like to thank them, but also show them that our purpose extends to them - helping them to be who they want to be.

Just as we support our people, we also support the communities in which we operate via the ASOS Foundation. With projects in the UK, India and Kenya, the Foundation helps disadvantaged young people be who they want to be. I am delighted to report that most recently the Foundation made a £1.2m commitment to co-fund Yorkshire's first OnSide Youth Zone in Barnsley, where we are the largest private employer. These state-of-the-art centres have been shown to reduce anti-social behaviour by up to 70% and help young people discover their talents so they can reach their potential.

Finally, as we enter the new financial year, I would like to thank our customers for their loyalty and commitment. Every day they vote for us with their orders. They are our inspiration and give us our purpose.

Mat Dunn

Chief Operating Officer & Chief Financial Officer

ASOS Plc

Annual Report and Accounts 2021

02

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A year in review

Strategic Report

Governance Report

Financial Statements

80%

Topshop brands acquisition

We delivered each milestone of our Topshop, Topman, Miss Selfridge and HIIT integration on schedule and they are now integrated into BAU. Site traffic saw a significant step-changepost-acquisition with a further step up after relaunch, driving strong sales momentum.

3X	Triple digit sales
	growth across
	Topshop brands

Brands on site

850+ 118 added during the year

Active customer base

26.4m 2020: 23.4m 

TGR landing

Following a multi-year development programme and an extended period of parallel run, our Truly Global Retail (TGR) system launched successfully, delivering significantly enhanced global retail planning and pricing capability

and provides an essential foundation for our flexible fulfilment aspirations.

ASOS Plc

Annual Report and Accounts 2021

revenue

2020: £3,263.5m 

£3,910.5m

adjusted profit before tax

£193.6m2020: £142.1m 

Nordstrom strategic partnership

This partnership will help drive the growth of the Topshop, Topman, Miss Selfridge and HIIT brands and pave the way for exploration of a new wider strategic partnership aimed at building greater awareness and engagement in the North American market.

Lichfield

7m units

Our fulfilment centre in Lichfield, UK launched in August 2021 and has increased our UK stockholding capacity to 7m units.

04

Fashion with Integrity

2030 Programme

Launched

September 2021

45% reduction in operational CO2 emissions per order since 2015/16*

*Performance as of end of FY20, the latest period reported.

3,126

employees

ASOS Plc

Annual Report and Accounts 2021

of all ASOS operations are powered by renewable energy

US Automation

+50%

increase stockholding to

US Automation15.5m units on track for

H2 FY23

+1.5m

increase in units per week

Flexible fulfilment

Flexible fulfilment is progressing to plan; further deployment of unified stock pool between the UK and US ahead of further rollout across ASOS and subsequent development of partner fulfilment capabilities by the end of this calendar year.

				ne					wo
			o				t
		e				e
	s				s
h	a				h	a
P				ASOS Fulfils	P				Partner Fulfilment

Reusable mail bag trial for ASOS staff launched

05

Operational and financial review

Strategic Report							Governance Report
									Year to		Year to
								31 August		31 August
							2021	2020	Change
Active customers¹ (m)	26.4	23.4	13%
Average basket value	£39.75	£39.52	1%
(including VAT)²
Average order frequency³	3.61	3.43	5%
Total shipped orders (m)	95.2	80.2	19%
Total visits (m)	3,091.8	2,691.2	15%

Financial Statements

Within operating costs, distribution and warehouse costs reduced as a percentage of sales by 60bps and 50bps respectively, to 13.0% and 9.1%. This was mainly driven by the COVID-19 returns rate benefit. Marketing costs increased by 140bps to 5.1% as

we invested into digital marketing and social media engagement, to drive awareness and support the launch of the Topshop brands with campaigns launched on TikTok and Snapchat during the year. We also continued to see improvements in other operating costs which reduced by 250bps to 9.8% supported by non-strategic cost removal of c.£30m for the year and increased leverage across our fixed cost base. This was due to further refinement of

Overview

ASOS delivered a strong performance across the year as we continued to navigate dynamic demand patterns, supply chain constraints, and changing COVID-19 restrictions throughout the year. We delivered sales growth of 22% (all sales numbers quoted throughout the operational and financial review are in constant currency and reflect total sales unless otherwise stated) with first half performance benefiting from significant lockdown restrictions, particularly in the UK. Many of these restrictions were removed

in the second half, but our consumers were still largely unable to participate in activities that drive demand for fashion. As a result, although we saw increased demand for event-led product, with 'going out' wear a higher proportion of our mix in the second half of the year, the mix of this product still remains well below pre-pandemic levels. In tandem with increased demand for event-led product, returns rates continued to trend back towards pre-pandemic levels, particularly in the UK, France and Germany.

Following the acquisition of the Topshop brands in the first half of this year, we have integrated at pace with supplier onboarding, transition of the brand team, and re-initiation of wholesale sales to Nordstrom, all completed in the second half of the year. We are pleased with the progress to date and remain on track to close out the final stages of the integration, which includes the publication of a full list of the Topshop brands Tier 1 to 3 factories by March 2022. The brands continue to perform strongly on ASOS.com, with sustained triple digit sales since acquisition driven by strong performance across the UK, US and Germany.

We announced ambitious new 2030 ESG goals at our recent Fashion with Integrity Capital Markets Event. The Fashion with Integrity 2030 programme is aimed at minimising ASOS' impact on the planet, delivering positive benefits for the people who work in fashion and meeting increasing demand from customers for greater choice in responsible fashion. These stretching ESG goals are set under two overarching pillars, Planet and People, which are underpinned by four key goals: Be Net Zero, Be More Circular, Be Transparent and Be Diverse. More information can be found on pages 30 to 33.

We are encouraged by ASOS' ability to weather the pandemic and emerge from the last 18 months a stronger organisation with a more comprehensive product offer, improved profitability and a robust balance sheet. Our focus now shifts to the next phase of our growth, which is focused on accelerating the pace and intensity of our international growth along with our commercial execution. We remain confident in our ability to navigate the short-term issues of demand variability and supply chain constraints as we move through the pandemic, and we strongly believe in our ability to capitalise on the available growth opportunity over the medium term.

Financial performance

ASOS delivered another strong set of results, with adjusted profit before tax of £193.6m (excluding Topshop, Topman, Miss Selfridge and HIIT one-off acquisition and integration costs and amortisation of acquired intangible assets). Excluding the estimated net COVID-19 related tailwinds, we delivered a 30% increase in adjusted profit before tax of £126.3m and a 20bps improvement

in adjusted PBT margin versus FY20. Adjusted EBIT (including the COVID-19 related tailwinds) grew to £206.6m, reflecting growth of 37% on the prior year, with adjusted EBIT margin of 5.3% representing 70bps margin expansion on the prior year.

With the removal of restrictions across most of our markets in the second half of the year, we saw product mix start to normalise, however we still saw an estimated COVID-19 tailwind of £67.3m driven by lower returns rates across the year, of which £48.5m estimated benefit was reported in the first half. Year-on-year, the COVID-19 tailwind was £22.3m favourable, due to the full annualisation of lower warehouse and distribution costs driven by lower returns, partially offset by freight-related headwinds. We expect product mix and returns rates to continue to normalise in FY22 with no COVID-19 benefit expected in FY22.

We closed the year with a net cash position of £199.5m, reflecting good underlying cash generation despite the impact of longer lead times due to COVID-19 related supply disruptions on stock build and a working capital unwind of £88.7m from the prior year. We invested £286.4m with the Topshop brands acquisition (£264.8m cash paid upfront and £21.6m contingent consideration relating to payments made for inventory in H2), whilst cash capital expenditure totalled £157.1m, driven by investment into TGR, the fit-out of our new Lichfield fulfilment centre and automation of the Atlanta fulfilment centre. Looking ahead to next year, as we embark on our next phase of growth, we envisage an increase in capital expenditure to c.£210.0m, driven by continued investment into Lichfield, US automation and an increase in our technology investment as we look to accelerate our customer experience and data science capabilities. We expect free cash flow to be broadly neutral despite these higher levels of investment.

Financial review
Overview		Year to 31 August 2021
	UK	EU	US	ROW¹	Total
	£m	£m	£m	£m	£m
Retail sales	1,595.7	1,156.5	442.0	589.6	3,783.8
Income from	56.3	28.8	24.2	17.4	126.7
other services²
Total revenue	1,652.0	1,185.3	466.2	607.0	3,910.5
Cost of sales					(2,134.1)
Gross profit					1,776.4
Distribution					(509.5)
expenses
Administrative					(1,076.8)
expenses
Operating profit					190.1
Finance income					0.2
Finance expense					(13.2)
Profit before tax
				177.1

1. Rest of World.
2. Income from other services comprises of delivery receipt payments, wholesale sales and marketing services.

Conversion⁴	3.1%	3.0%	10bps
Mobile device visits	83.2%	85.5%	(230bps)

1. Defined as having shopped in the last 12 months as at 31 August.
2. Average basket value is defined as net retail sales divided by orders.
3. Calculated as last 12 months' total orders divided by active customers.
4. Calculated as total orders divided by total visits.

We achieved strong total sales growth of 22% year-on-year as we continued to operate against a backdrop of COVID-19 restrictions and the resulting impact on our consumers. Growth was underpinned by exceptional performance in the UK which grew at 36%, whilst internationally we were pleased with our progress in both the EU +15% and US +21%, reflecting the wholesale contribution in P4 which continues to gain momentum. RoW delivered 6% growth year-on-year.

Since launch, Topshop, Topman, Miss Selfridge and HIIT have established themselves as a key part of the ASOS brands offer, with sales growing by triple digits year-on-year since acquisition. Pleasingly, these brands continue to resonate strongly with consumers in the UK, US and Germany where we have exceptionally strong growth rates. Topshop brands have contributed an estimated £61.7m of incremental sales since the acquisition and integration. From a geographical split, the UK continues to over- index in sales, contributing more than 50% of the total Topshop brands sales, with Europe contribution at 23% and US contribution at 16%. When we announced the acquisition, we indicated that we expected a ramp up period in FY21 while we transitioned stock to our warehouses, onboarded new suppliers, audited and rationalised the supplier base and built out the Topshop range and, in light of this, we are pleased with the performance of these brands to date. We see further potential for growth via our strategic partnership with Nordstrom in North America as well as the broader development of the wholesale business.

Our active customer base increased by 3.0m to reach 26.4m active customers, up 13% year-on-year. With a reduction in event-led shopping continuing throughout most of the year, we continued to see an impact on churn, with low frequency occasion wear shoppers dropping out the base, particularly

in our international markets which have a higher level of occasion wear mix. Our growth was underpinned by strong new customer acquisition and we continued to see a more engaged shopper added to the base in FY21.

Gross margin stepped back by 200bps driven by COVID-19 related inbound freight costs and Brexit duty, product mix and adverse foreign exchange movements, which had an adverse impact on gross margin during FY21. This was mainly due to the strengthening of the pound against emerging market currencies - primarily the Russian Rouble, which devalued by 15% across the year. We have seen a recovery in demand for event-led product in the second half of the year across all our key markets, resulting in increasingly normalised returns rates and a rebalancing of our product mix towards event-led product. We saw a step up in promotional activity due to competitive pressures in RoW and as we invested for growth in key markets, along with price investment into Europe and the US, which we were able to fund through improved intake margins.

our operational structure, and reduced facilities and travel costs. Depreciation and amortisation fell by 10bps as a percentage of sales as we leveraged our existing fixed asset base to drive higher sales, while Lichfield went live on 28 August 2021 meaning there was only a minor depreciation impact in FY21.

Adjusted profit before tax increased by 36% to £193.6m (excluding one-off acquisition and integration costs of £10.5m and amortisation of acquired intangible assets of £6.0m). Profitability continued to benefit from a COVID-19 tailwind of £67.3m. Excluding the impact of the estimated COVID-19 benefits from FY21 and FY20 PBT, we delivered 3.2% adjusted PBT margin, reflecting a 20bps expansion on the prior year, and 30% growth in PBT. Despite the external challenges, we increased our overall margin through continued rigour of our cost base and strong operational grip. This is reflected in a further reduction in our operating costs as a percentage of sales.

Gross margin

Gross margin reduced by 200bps driven by increased inbound freight and duty, product mix and foreign exchange movements. Brexit resulted in incremental duties in FY21 as a result of duties incurred on product shipped between the UK and Europe. Although we have worked to reduce the impact of Brexit on our costs, we anticipate that a portion of this will remain. We also saw freight-related impacts on our costs, most notably in the second half of the year, driven predominantly by increased freight rates. Increased lead time impacts were also experienced between UK and EU as a result of Brexit, with additional customs requirements and checks.

In response to some of the above dynamics, we worked on various ways to mitigate these impacts to ASOS. This included entering a long-term ocean freight contract directly with a major shipping line, with rates secured that represented a significant reduction against current market levels. Furthermore, we introduced a sea/air combination, ensuring flexibility existed with transit times on longer lead sourced product.

In the second half of the year, product mix began to normalise with increased demand for event-led products particularly evident in the UK, Europe and the US. Whilst this is still not back to pre- pandemic levels of demand, we have seen demand for occasion wear step up as restrictions were lifted and vaccination rates increased. In line with this, returns rates have started to normalise.

We took the decision at half year to invest in the pricing of ASOS Design products across Europe and in the US, continuing our ambition to develop the customer offer in these markets and refining the price perception of the brand relative to competitors. These investments were partially offset by an improved buying margin, reflecting our continued progress in this space. Lastly, we saw an FX-related headwind in gross margin, primarily as a result of the strengthening of emerging market currencies where we hedge on a limited basis and therefore where some exposure remains.

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