ASOS : Final results for the year ended 31 August 2021 (Statement)

11 October 2021	ASOS Plc
	Global Online Fashion Destination
	Final Results for the year to 31 August 2021

ASOS delivers strong financial results

Investing for growth despite short-term headwinds

Commits to new medium-term plan and growth targets

Summary financial results

	Year to 31	Year to 31		CCY2
£m1	August 2021	August 2020	Change	Change
Group revenues3	3,910.5	3,263.5	20%	22%
Retail sales4	3,783.8	3,171.0	19%	21%
Gross profit	1,776.4	1,547.4	15%
Gross margin	45.4%	47.4%	(200bps)
Adjusted EBITDA4	343.7	279.4	23%
Adjusted EBITDA Margin	8.8%	8.6%	20bps
Adjusted EBIT4	206.6	151.1	37%
Adjusted EBIT Margin	5.3%	4.6%	70bps
Reported profit before tax	177.1	142.1	25%
Adjusted profit before tax4	193.6	142.1	36%
Diluted earnings per share	125.5p	125.6p	(0%)
Net cash/(debt)4	199.5	407.5

1All numbers subject to rounding throughout this document, 2Constant currency is calculated to take account of hedged rate movements on hedged sales and spot rate movements on unhedged sales, 3All references to segmental sales throughout the document are total sales unless otherwise stated, any reference to total or retail sales growth throughout the document is on a constant currency basis, 4A reconciliation of each adjusted measure to IFRS can be found on pages 16 and 17

Results Summary

• 13% growth in active customer base to 26.4m
• Sales growth of 22%, with exceptional growth in the UK +36% and strong growth in the US +21%; EU and RoW grew at +15% and +6% respectively
• P4 underlying total sales growth of 15% in line with guidance:
• • UK +29%, US +32%, EU +4%, RoW (4)%
  • EU most impacted by global supply chain challenges; RoW hit by COVID-19 related disruptions to our delivery proposition
• Gross margin down by 200bps to 45.4%, driven by elevated freight & Brexit-related duty costs, product mix, FX headwinds and increased customer investment
• Adjusted PBT of £193.6m (including estimated £67.3m COVID-19 benefit)
• • Adjusted PBT exc. COVID-19 benefit of £126.3m up 30% on the prior year reflecting strong sales growth and continued efficiency improvements
• Free cash flow (FCF)4 generation of £35.9m and a net cash position of £199.5m
• • FCF generation of £294.5m over the last 24 months

Board Changes

As detailed in a separate release today, ASOS has announced a number of Board changes to deliver the next phase of global growth:

• Nick Beighton is to step down as CEO. Mat Dunn, CFO, will take on the additional role of Chief Operating Officer and lead the business on a day-to-day basis, with Katy Mecklenburgh, currently Director of Group Finance, to support as Interim CFO
• Ian Dyson to become Chair, replacing Adam Crozier whose decision to step down was previously announced
• Search for a new CEO, led by Ian Dyson, is underway
• Jørgen Lindemann to join the Board as a Non-Executive Director

Strategic & Operational Highlights

• Strong development of the ASOS platform, with further category development and additional capabilities:
• • Face + Body growth of 49%; now a £150m business
  • ASOS Design +7% and venture brands +69%
  • ASOS platform enhanced with the deployment of 'ASOS Fulfils' to the UK, Russia, France, Italy and
    Australia
  • Integration of Topshop brands with sustained triple digit sales growth since acquisition
• Strong execution with continued discipline and operational grip:
• • c.£30m of non-strategic cost removed, cumulatively £80m to date since FY19
  • Lichfield fulfilment centre opened successfully, providing incremental capacity for peak

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• • TGR system implemented and embedded across the business
• Strategic partnership established with Nordstrom to help drive growth of Topshop brands in North America
• • ASOS brands to be sold in select Nordstrom stores and on Nordstrom.com; first product to be sold by calendar year end, followed by a full launch in the first half of 2022
  • Click and collect services to be rolled out across the wider Nordstrom estate in 2022
• Launched Fashion with Integrity 2030 programme with ambitious new ESG goals

FY22 Outlook

• Investing to capture growth despite short-term headwinds
• FY22 sales growth expected to be in the range of 10% and 15% with H1 revenue growth in mid-single digits reflecting:
• • Tougher comparables in the first half of the year, particularly the UK (+66% since FY19)
  • Industry-widesupply chain pressures expected to continue throughout H1, resulting in longer lead times and constrained supply from a number of our partner brands
  • An acceleration of sales in the second half of the year driven by increased event-led demand, an easing of supply constraints and marketing investment to support international growth
• Our FY22 adjusted PBT expectations are in the range of £110m - £140m, reflecting:
• • Normalised returns rates and resultant removal of the £67.3m COVID-19 related benefit
  • Notable cost headwinds including incremental inbound freight costs, Brexit duty annualisation, outbound delivery costs and labour cost inflation
  • Continued improvements in operational excellence initiatives to reduce costs and mitigate inflationary pressures
  • An increase in marketing as a percentage of sales of c.1% in support of our international growth ambitions
• Capex investment of c.£210m supporting the automation of Lichfield and Atlanta fulfilment centres and increased technology investment behind our customer experience and data science capability
• Expect FCF generation to be broadly neutral

Clear plan in place to deliver £7bn of annual revenue within the next 3 to 4 years

• Continued focus on fashion-loving20-somethings with a Total Addressable Market of £430bn in the UK, US, Europe and core RoW territories providing significant further growth potential
• Medium-termfinancial targets:
• • £7bn of annual revenue
  • At least a 4% EBIT margin, with significantly increased marketing investment
  • Capital expenditure in the range of £200m - £250m p.a
• We will do this 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
  • Strengthening the ASOS platform with the launch of 'Partner Fulfilment', targeting c.5% of Gross Merchandise Value (GMV)
• Revenue and margin targets fully aligned with our long-term incentive programme
• The Capital Markets Day planned for 14th October 2021 to outline the detail behind the new strategic framework, will now be held on 10th November 2021

Mat Dunn, Chief Operating Officer and CFO, said:

"ASOS has delivered another strong performance, with continued growth in customer numbers driving further increases in sales and profits. Our success has been underpinned by our focus on delighting fashion-loving20-something customers with greater choice, service, and engagement. We have also continued to invest in our platform and offer, including the successful acquisition and integration of the Topshop brands. This performance is based on the hard work and determination of all ASOS-ers and I want to thank them for everything they have done.

"Looking ahead, while our performance in the next 12 months is likely to be constrained by demand volatility and global supply chain and cost pressures, we are confident in our ability to capture the sizeable opportunities ahead. In the last two years, we have transformed ASOS with investment in infrastructure and the customer offer; we have generated strong revenue growth and free cash flow and improved structural profitability. But we know there is more to do and today we are setting out details of our ambitious plan to significantly increase ASOS's sales and profitability becoming a £7bn business within three to four years. I am delighted to be taking on the role of COO and will work tirelessly with all ASOS- ers to deliver against our refreshed strategy."

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Investor and analyst meeting:

There will be a webcast for investors and analysts that will take place at 8.00am, 11 October 2021. To access and to partake in Q&A dial 0800 279 7209 / [phone], and use Meeting ID: 5692723. For a listen-only live link please join the following link https://webcasting.brrmedia.co.uk/broadcast/616062f14e29f55a941918d7

A recording of this webcast will be available on the ASOS Plc investor centre website by tomorrow: http://www.asosplc.com/investors.aspx

For further information:
ASOS Plc	Tel: [phone]
Mat Dunn, Chief Operating Officer & Chief Financial Officer
Taryn Rosekilly, Director of Investor Relations
Website:www.asosplc.com/investors
Headland Consultancy	Tel: [phone]
Susanna Voyle / Stephen Malthouse
JPMorgan Cazenove	Tel: [phone]
Bill Hutchings / Will Vanderspar
Numis Securities	Tel: [phone]
Alex Ham / Jonathan Wilcox / Tom Jacob
Berenberg	Tel: [phone]
Michelle Wilson / Jen Clarke
Forward looking statements:

This announcement may include statements that are, or may be deemed to be, "forward-looking statements" (including words such as "believe", "expect", "estimate", "intend", "anticipate" and words of similar meaning). By their nature, forward-looking statements involve risk and uncertainty since they relate to future events and circumstances, and actual results may, and often do, differ materially from any forward-looking statements. Any forward-looking statements in this announcement reflect management's view with respect to future events as at the date of this announcement. Save as required by applicable law, the Company undertakes no obligation to publicly revise any forward-looking statements in this announcement, whether following any change in its expectations or to reflect events or circumstances after the date of this announcement.

Background note

ASOS is a destination for fashion-loving20-somethings around the world, with a purpose to give its customers the confidence to be whoever they want to be. Through its market-leading app and mobile/desktop web experience, available in ten languages and in over 200 markets, ASOS customers can shop a curated edit of over 90,000 products, sourced from more than 850 of the best global and local third-party brands and its mix of fashion-ledown-brand labels - ASOS Design, ASOS Edition, ASOS 4505, Collusion, Reclaimed Vintage, Topshop, Topman, Miss Selfridge and HIIT. ASOS aims to give all of its customers a truly frictionless experience, with an ever-greater number of different payment methods and hundreds of local deliveries and returns options, including Next-Day Delivery and Same-Day Delivery, dispatched from state-of-the- art fulfilment centres in the UK, US and Germany.

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ASOS Plc ("the Group")

Global Online Fashion Destination

Final Results for the year to 31 August 2021

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 document are in constant currency and reflect total sales unless otherwise stated) with first half performance benefitting 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 four iconic brands: Topshop, Topman, Miss Selfridge and HIIT 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.

During the period, we announced the formation of a strategic partnership with US-basedmulti-channel retailer Nordstrom, where Nordstrom invested to acquire a minority interest in the Topshop, Topman, Miss Selfridge and HIIT brands. This partnership enables ASOS to work with Nordstrom to leverage its US market expertise and extensive customer awareness to build an exciting future for these brands. It also paves the way for wider collaboration between ASOS and Nordstrom which includes the soft launch of an edit of ASOS Design, Collusion and AsYou in selected US stores and across Nordstrom.com by the end of calendar year 2021, with a full launch following in the first half of 2022. Furthermore, ASOS click and collect services will be rolled out across the wider Nordstrom store estate as the next step to enhance the ASOS proposition for our US customers.

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.

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.

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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.

Performance by Market

UK

The UK continued to deliver exceptional growth, with sales growing 36% to £1,652.0m as we continued to take share of the online market, and grew our overall market share accordingly. We saw a reduction in churn rates coupled with strong growth in new customers. We added 1.4m new customers during the period, acquiring more high street shoppers. The cohort of customers acquired over the last 18 months are highly engaged shoppers, who are aware of our breadth of offer and more likely to return than average. As well as strong customer growth, we saw an increase in average basket value (ABV) and frequency, albeit with a step back in average selling price (ASP) as casual wear still retains a larger portion of our product mix than pre-pandemic. Furthermore, we saw a significant step up in our Premier customer base after lockdown restrictions were lifted with growth of 18% across the year, which was strongly weighted towards the second half. Our underlying year-on-year P4 sales growth, of 29%, slowed somewhat relative to our performance in P3 of 37%. This was driven in part by tougher comparatives, in addition to a poor summer season, a warmer start to autumn/winter, and travel-related restrictions which disproportionately impacted our 20-something consumers, many of whom were only eligible for their second dose of the COVID-19 vaccination in August and September.

US

We delivered strong growth in the US, with retail sales growing by 18% and total sales growth of 21%. Total sales growth was supported by wholesale sales contribution from the Topshop brands, which launched in April 2021 and built strong momentum towards the end of the period. We added 0.3m new customers during the period, reflecting a 9% increase in the active customer base with visits growth of 16%. ABV and frequency remained flat year-on-year, with a step back in ASP driven by the shift into lower ASP casual wear categories in FY21, offset by an increase in average basket size (ABS) in the year. In line with other markets, we have experienced intake constraints in the US driven by global shipping and US customs delays, impacting newness, availability and speed to market. However, we were encouraged to see improvements in H2 as we increased the range of products available via ASOS Fulfils, which augments the stock held in Atlanta from Barnsley. Pre-pandemic,event-led product in the US over-indexed by an average of 10% compared to our other markets. We are, however, starting to see demand for event-led product normalise back to 2019 levels which is particularly encouraging for the US business. Our Topshop brands continue to resonate strongly in the US market, with the US now accounting for 16% of our FY21 Topshop revenues (retail and wholesale).

EU

We delivered sales growth of 15% in Europe, along with 13% growth in our active customer base. Growth slowed in P4 to 4% (on an underlying basis) impacted by more muted consumer demand. ABV and frequency grew by 1%, however ASP stepped back on the year. Demand for dresses has seen a significant step up, however with both shipping and Brexit- related customs delays to contend with, our stock profile has not been in the optimal position to capitalise on the available demand in the market, resulting in weaker viewed availability through the back end of P3 into P4. In spite of this, we saw

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