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Year in Review

The Group has delivered a strong set of results for the year to 31 August 2016 with retail sales growth of 26% to £1,403.7m (2015: £1,112.2m) driven by strong product, delivery improvements and further price investments across our major markets. Our sales momentum strengthened across all regions as the year progressed, most notably in the US following our decision to fully invest in our US customers through both price and proposition improvements.

In line with guidance, the Group gross retail margin decreased by 30bps to 48.5% (2015: 48.8%) as price investments in the US, Europe and RoW were offset by a higher full price mix. Delivery receipts grew 35% aided by higher next-day delivery usage and the expansion of Premier globally. We also saw an increase of 29% in third-party revenues which had a positive impact on gross margin, which at 50.0% (2015: 50.1%) was only 10bps down compared to last year.

Continuing profit before tax and exceptional items grew by 37% to £63.7m (2015: £46.4m), as investments in delivery proposition, marketing and depreciation were offset by warehouse automation efficiencies and the non-recurrence of last year’s £4.9m fixed asset write-offs.

The Group discontinued its in-country China operation which incurred an operating loss before tax of £3.6m up to the point of closure in May 2016 (2015: £5.2m) and one-off exceptional closure costs before tax of £6.5m, of which £4.4m was non-cash. Previously planned investment in China was re-deployed elsewhere.

In September 2016, the Group settled its trademark infringement disputes. This resulted in a one-off exceptional legal settlement of £20.9m (including associated legal fees) representing full, final and global settlement of all outstanding litigation. Importantly this settlement now allows us to more actively target the significant and growing sportswear market. The settlement will be paid in the new financial year. Within the comparative results for the year to 31 August 2015, one-off business interruption reimbursements of £6.3m in respect of a warehouse fire in 2014 are also reported as an exceptional item.

Our Eurohub 2 site was handed over to us on 29 September 2016, and we remain on track to commence live operations in March 2017 with costs in line with expectations.

After taking into account exceptional items and discontinued operations, the Group generated profit before tax of £32.7m (2015: £47.5m).


At ASOS, our product offer is truly unique, combining our in-house designed ASOS own-label with the best curated edit of third party brands. We do not proactively manage our own label and branded mix: we let our customers choose, ensuring we offer the best quality at the right price. We launch approximately 4,000 new styles each week, now stocking over 85,000 product lines.

Our ASOS own-label offers an unparalleled width of product for 20-somethings, catering for all customer segments and sizes, across all categories and price points. Alongside the core own-label offer, we also work on collaborations and sub-brands such as the ASOS Bridal collection, ASOS White and ASOS Africa, which augment the range by adding a point of difference with a new aesthetic and a different story.

Our third party branded edit spans from some of the largest global retailers to small, new and emerging brands. This year we added 233 new brands, including upcoming ones such as Young Bohemians, Nocozo and Sixth June, as well as more famous names like Kendall and Kylie. Each selection forms an integral part of the whole ASOS offer, bringing something new, different and relevant to each season. To satisfy the appetite for something different, we also work with brands to develop exclusive ranges, including unique colours and styles as well as exclusive collections. This year we have launched The Noak and Heart & Dagger labels on Menswear and a globally exclusive swimwear range with Monki on Womenswear. As a result, nearly 60% of our product offer is totally exclusive and unique to ASOS.


Mobile continues to be critical to our success and the vision is to fundamentally change the way customers live and shop for fashion on mobile. We now have more than 10m active installs of our app, with 7.5m new downloads during the financial year. On average, ASOS customers shop on the app eight times a month, spending more than 70 minutes online during that time. As a result, 66% of traffic now comes from mobile devices and 51% of orders are now being placed on our mobile platforms.

During the year, we launched the brand new iOS ASOS mobile app which was built completely from scratch using the latest technologies and incorporated a new homepage and design, easier navigation and innovative features such as spotlight search and 3D touch for iPhone 6S users. We have also improved the quality of product imagery and the performance of our Video Catwalk function. Customer feedback and engagement has been very positive, with the new app earning a 5-star rating in App Stores worldwide.


We understand our customers, what inspires them and what interests them. We reach out to them by producing great content, which makes us much more than just a place to shop. By becoming a fashion destination offering a unique customer experience, we turn a sale into a loyal customer, who returns to us frequently. This is evidenced in our increasing customer engagement metrics, with visits growth of 22%, order growth of 30%, average basket value up 3% and average order frequency up 4%. We exited the year with active customers of 12.4m, an increase of 25% in comparison to last year.

In the UK, we launched ‘ASOS A-List’, our loyalty programme, giving customers the opportunity to build up points from purchases which are then exchanged for vouchers for use on our platforms. Customer engagement with ’ASOS A-List’ has been strong and we are starting to see increases in key metrics such as basket size and order frequency from participating customers.

We continue to encourage participation across all our social platforms and now have over 19m followers, up 54% compared to last year.


Our customers have high expectations. We aim to offer a friction-free online shopping experience, every time.

Delivery and returns

Continually enhancing the range of delivery and returns options enables us to move towards our goal of providing a best-in-class customer proposition. We have stepped up the pace of change in this area during the financial year.

In the UK, we introduced a 4-hour estimated delivery window for standard delivery and returns collections as well as a mobile label-less returns solution in 3,000 locations. We have extended Click & Collect cut-offs from 5pm to 6pm, next day delivery cut-offs on Saturday and Sunday from 5pm to 7pm, and also launched ‘Precise Delivery’ where customers can select a one-hour delivery window.

Internationally, we introduced unlimited free next-day delivery to both home and store for French Premier customers and free next-day delivery for German and Northern Irish Premier customers. We launched next-day delivery in 14 additional EU countries, including Austria, Cyprus, Finland, Greece, Luxembourg, Portugal and several Eastern European countries, making next day delivery available to all 29 EU member states. Free returns are a key part of our customer proposition and during the year we extended this to the whole of the EU, and to Australia in August 2016.

We introduced Express services to 66 new countries and also reduced the cost of this service in several territories. We improved standard delivery in the US, Estonia, Latvia, Lithuania, Russia, Canada and Israel, with all orders now being sent via a tracked solution. A mid-tier delivery service was launched in Hong Kong and in Singapore and South Korea our delivery lead time was also improved.

Customer Care

Providing help to customers whenever and wherever they need it is essential to delivering a best-in-class service and we continue to provide support across social media, live chat, email and telephony. We are delivering this service 24/7, 365 days a year across key local languages to our English, French, German, Spanish, Italian and Russian customers, with local language speaking support also available in Dutch and Korean. We have upheld service levels during the year, responding to all emails within one hour, all social media communications from customers within 15 minutes and all live chat or telephony within 30 seconds.

We have continued to invest in our technical capabilities, enabling a reduction in the overall cost per contact whilst enhancing the service we offer. During the year, we have upgraded the self-serve functionality for customers with the launch of an updated help section, making more advice and information available on both desktop and mobile sites. It is now easier to contact customer advisers with the continued development of our live chat offering and social capabilities.


During the year, we added a further packing module to the mechanised picking solution at our Barnsley warehouse which allowed us to achieve record levels of despatch during the summer sale period. The building of a second despatch sorter is underway which will further automate processes and increase capacity.

Planning permission has been granted for an extension to the Barnsley building in order to add extra office space as well as to further enhance facilities for our people who work there. This includes a gym, training rooms, a wellbeing suite and further offices. We will be investing a further c.£20m in this warehouse in the new financial year.

There has been comment recently in the media and elsewhere on working conditions in our warehouse which are inaccurate and misleading. For example, contrary to what has been alleged, we do currently pay above the National Living Wage for all employees and are committed to migrating towards the living wage foundation level over the next 18 months. We do not use, and have never used, zero-hours contracts. There is a full statement on these and other issues on our Plc website

Our existing German Eurohub operation continues to expand in line with our strategy of fulfilling more EU orders from Berlin and we exited the year holding over 3.5m units of stock and despatching just over 50% of total EU orders from this site. During the year, Belgium, the Netherlands, Spain, Denmark and Luxembourg were added to the local despatch list and we are looking to add further countries in the new financial year as we integrate with more carriers. Our returns processing facility in Poland processes nearly all returns from the EU and continued to increase throughput during the year.

Ground works at Eurohub 2 were completed in February 2016 with the foundations and columns for all halls finished in April 2016. The site was handed over to us on 29 September 2016 and we remain on track to commence live operations in March 2017 with costs in line with expectations.

Our US warehouse consistently fulfils over 25% of US orders. During the year, we commenced a review of the US market with the purpose of designing a supply chain that will underpin our growth plans in this country. We will communicate the conclusion of this review at the appropriate time.


Our technology continues to evolve at pace. Over the course of the year we completed the development of a completely new microservice-based digital platform which is deployed in the Cloud. The new platform delivers globally consistent high performance, resilience, business flexibility and supports complete freedom to innovate in the way we interact with customers. Every aspect of our customer experience – identity, content, product, search, price, stock, checkout, payment and order processing – is now supported by independently deployable and enhanceable platform services. Through the global reach of the Cloud, we can roll-out new services worldwide so they are hosted as close as possible to our customers, in the configuration needed to deliver high performance.

This new platform has been designed in anticipation of our future global ambitions. This agility will allow us to continue to invest at pace, delivering new customer experiences and innovations to delight our customers. We have extensive plans to invest further in our mobile app and web experiences, personalisation, community and content technologies, many of which are underpinned by our rich data insights.

We have recently mobilised our global fulfilment programme which will optimise global stock management and warehouse fulfilment plans. The programme will deliver the fulfilment logic which sits between country websites and warehouses and will underpin the fulfilment from our Barnsley and Eurohub distribution centres.

We will be increasing investment in core operational systems. These include new end-to-end merchandising and planning systems for our retail teams (Truly Global Retail), plus a new finance system which will support the ability to buy, sell and account for stock in multiple locations and in local currencies. These new retail and finance systems are multi-year investments and will enable our teams to operate at an even greater scale across all global fulfilment centres.


ASOS headcount increased to 2,664 direct employees as at 31 August 2016 (2015: 2,038) primarily as a result of additions in the Retail, Technology and Customer Care teams.

We will commence a 36-month refit at our head office at Greater London House (GLH) during the new financial year. We have recently extended our lease there for a further 15 years and over this time, we will invest up to £40m to support the growth of the business and provide the very best environment for our people. The total space will increase from 180,000 ft2 to 232,000 ft2 which combined with the very latest technology, will provide us with sufficient flexibility to accommodate future headcount growth. The plans for GLH include an ASOS training academy, showroom facility, event spaces that will accommodate up to 1,000 people and new catering and meeting facilities.

Given the increasing momentum within the business, we have decided to accelerate investment in both logistics and technology capabilities to ensure we capture the growth opportunities available to us. We now anticipate capital expenditure in the range of £120m to £140m in the new financial year compared to the £87m invested during the year just ended. Within technology we are progressing at speed with both Truly Global Retail and global fulfilment programmes. This is in addition to continuing with our fundamental replatforming work and upgrading our finance systems. Within supply chain we will add a fifth sorter at Barnsley, further extending the facility and enhancing its inbound capacity. At Eurohub 2 we will complete the fit out of Phase 1 of this development and commence Phase 2.


Year to 31 August 2016




Retail sales 1,403.7 603.8 179.2 374.9 245.8 799.9
Growth 26% 27% 50% 28% 9% 25%
Growth at constant exchange rate 26% 27% 40% 28% 14% 25%
Delivery receipts 34.5 15.3 5.5 7.3 6.4 19.2
Growth 35% 33% 49% 43% 21% 36%
Third party revenues 6.7 6.4 0.1 0.1 0.1 0.3
Growth 29% 46% (88%) 100% 100% (63%)
Total revenues 1,444.9 625.5 184.8 382.3 252.3 819.4
Growth 26% 28% 49% 28% 10% 25%
Growth at constant exchange rate 26% 28% 40% 28% 14% 26%

1 All numbers subject to rounding and exclude results from the discontinued operations in China unless otherwise stated.


Year to
31 August
Year to
31 August
Active customers1 (m3) 12.4 9.9 25%
Average basket value (including VAT) £70.84 £68.74 3%
Average units per basket 2.82 2.79 1%
Average selling price per unit (including VAT) £25.09 £24.63 2%
Total orders (m3) 38.3 29.5 30%
Total visits (m3) 1,348.7 1,102.1 22%

1. Defined as having shopped during the last 12 months.
2. Calculated as total orders divided by total visits.
3. All numbers subject to rounding and exclude results from the discontinued operations in China unless otherwise stated.


Year to
31 August 20161




Gross profit (£) 722.2 294.5 111.9 179.8 136.0 427.7
Growth 26% 29% 50% 22% 12% 24%
Retail gross margin 48.5% 45.2% 59.3% 46.0% 52.7% 51.0%
Growth (30bps) 20bps 50bps (240bps) 80bps (60bps)
Gross margin 50.0% 47.1% 60.6% 47.0% 53.9% 52.2%
Growth (10bps) 30bps 40bps (230bps) 90bps (50bps)

1 All numbers subject to rounding and exclude results from the discontinued operations in China unless otherwise stated.


The Group increased its investment in operating resources by 25% to £659.2m, while the total operating costs to revenue ratio improved by 50bps.

£m1 Year to
31 August 2016
Year to
31 August 2015
Distribution costs (216.0) (168.2) (28%)
Payroll and staff costs2 (132.6) (104.7) (27%)
Warehousing (114.3) (96.9) (18%)
Marketing (76.6) (55.7) (38%)
Production (6.3) (4.9) (29%)
Technology costs (24.5) (19.2) (28%)
Other operating costs (57.3) (54.5) (5%)
Depreciation and amortisation (31.6) (22.9) (38%)
Total operating costs (659.2) (527.0) (25%)
Operating cost ratio (% of sales) 45.6% 46.1% 50bps

1 All numbers subject to rounding and exclude results from the discontinued operations in China and exceptional items unless otherwise stated.
2Inclusive of non-cash share-based payment charges.

Distribution costs increased by 30bps to 14.9% of revenue, driven by the expansion of the delivery proposition globally, particularly in relation to EU free returns and US standard delivery days.

Staff costs remained in line with last year at 9.2% of revenue as average headcount increased by 26% in line with business growth. Share-based payment charges included within this cost line amounted to £4.5m (2015: £2.2m) as our second Long-Term Incentive Scheme was granted to senior management during the year.

Warehousing costs decreased by 60bps to 7.9% of revenue due to increased efficiency at Barnsley as our automation technology operated effectively for the full financial year.

Marketing costs have increased by 40bps to 5.3% of sales. This is based off a low comparative figure as last year we reduced spend on campaigns whilst we focused on price reinvestments. This year we increased the digital marketing mix and shifted towards more mobile channels. This spend was partly offset by savings generated from changes to our magazine distribution strategy, which reduced the number of editions from ten to four.

Other operating costs decreased by 80bps to 4.0% of revenue due principally to the non-recurrence of the one-off £4.9m fixed asset write-offs in the prior year. Removing the impact of this from the comparatives, other operating costs would have improved by 30bps compared to last year driven by savings from the inclusion of legal costs associated with the settlement of the trademark disputes within exceptional items.

Depreciation increased by 20bps to 2.2% of revenue following recent acceleration of investments in our logistics and technology infrastructure.


In September 2016 the Group settled its trademark infringement disputes with high-performance cycle wear manufacturer Assos of Switzerland GmbH, and German menswear retailer Anson’s Herrenhaus KG. This resulted in a one-off exceptional legal settlement cost of £20.9m (including associated legal fees) representing full, final and global settlement of all outstanding litigation.

In the comparative period to 31 August 2015, we received final business interruption insurance reimbursements of £6.3m as a result of a fire in our Barnsley warehouse in June 2014.


In May 2016 the Group discontinued its in-country China operation which incurred an operating loss before tax of £3.6m up to the point of closure (2015: £5.2m) and one-off exceptional closure costs before tax of £6.5m, of which £4.4m was non-cash relating principally to the impairment of fixed assets.


The Group generated continuing profit before tax and exceptional items of £63.7m, up 37% compared to last year, due to investment in gross margin being offset by operating expense leverage.

  Year to 31 August 2016 Year to 31 August 2015
£m1 Before
(Note 4)
Revenue 1,444.9 - 1,444.9 1,143.0 - 1,143.0
Cost of sales (722.7) - (722.7) (569.9) - (569.9)
Gross profit 722.2 - 722.2 573.1 - 573.1
Distribution expenses (216.0) - (216.0) (168.2) - (168.2)
Administrative expenses (443.2) (20.9) (464.1) (358.8) 6.3 (352.5)
Operating profit 63.0 (20.9) 42.1 46.1 6.3 52.4
Net finance income 0.7 - 0.7 0.3 - 0.3
Profit before tax 63.7 (20.9) 42.8 46.4 6.3 52.7
Income tax expense (12.3) 4.2 (8.1) (10.4) (1.3) (11.7)
Profit after tax from continuing operations 51.4 (16.7) 34.7 36.0 5.0 41.0
Effective tax rate 19.3% (20.1%) 18.9% 22.4% 20.6% 22.2%
Loss before tax from discontinued operations (3.6) (6.5) (10.1) (5.2) - (5.2)
Tax on discontinued operations 0.3 (0.5) (0.2) 1.0 - 1.0
Loss after tax from discontinued operations (3.3) (7.0) (10.3) (4.2) - (4.2)
Group profit before tax 60.1 (27.4) 32.7 41.2 6.3 47.5
Income tax expense (12.0) 3.7 (8.3) (9.4) (1.3) (10.7)
Group profit after tax 48.1 (23.7) 24.4 31.8 5.0 36.8
Effective tax rate 20.0% (13.5%) 25.2% 22.8% 20.6% 22.5%

1 All numbers subject to rounding.

The effective tax rate from continuing operations before exceptional items decreased by 310bps to 19.3% (2015: 22.4%). This is principally due to prior year adjustments relating to amendments to capital allowance claims and R&D reliefs finalised for the years ending 31 August 2014 and 2015. The effective tax rate from continuing operations after exceptional items decreased by 330bps to 18.9% (2015: 22.2%). The Group effective tax rate (including discontinued operations) for the year is 25.2% (2015: 22.5%).

Going forward, we expect the effective tax rate for continuing operations to be approximately 100bps higher than the prevailing rate of UK corporation tax due to permanently disallowable items.

Earnings per share
Basic and diluted earnings per share from continuing operations before exceptional items increased by 43% and 42% to 61.9p and 61.8p respectively (2015: 43.4p and 43.4p). This was driven by the increase in continuing profit before tax and exceptional items of 37% combined with the reduced effective tax rate. Basic and diluted earnings per share from continuing operations after exceptional items decreased by 15% to 41.8p and 41.7p respectively (2015: 49.4p and 49.4p).

Basic and diluted loss per share from discontinued operations were 12.4p and 12.4p respectively (2015: 5.0p and 5.0p). Basic and diluted earnings per share for the Group after exceptional items and discontinued operations decreased by 34% to 29.4p and 29.3p (2015: 44.4p and 44.4p).


The Group continues to enjoy a robust financial position including a closing cash balance of £173.3m (2015: 119.2m).

Net assets decreased by £36.9m to £200.4m during the year (2015: £237.3m) due to the Group’s profit after tax of £24.4m being more than offset by a fair value decline of £82.3m in our outstanding forward contracts as at 31 August 2016 following adverse exchange rate movements, particularly in the US dollar and Euro. The summary statement of financial position is shown below.

At 31 August 2016 At 31 August 2015
Goodwill and other intangible assets 113.5 76.2
Property, plant and equipment 77.2 64.4
Derivative financial assets - 0.2
Deferred tax asset 13.3 -
Non-current assets 204.0 140.8
Inventories 257.7 193.8
Net current payables (355.7) (214.5)
Cash and cash equivalents 173.3 119.2
Derivative financial (liabilities)/assets (76.0) 6.1
Current tax liability (2.9) (3.6)
Deferred tax liability - (4.5)
Net assets 200.4 237.3

1All numbers subject to rounding.


The Group’s cash balance increased by £54.1m to £173.3m during the year (2015: £119.2m) as capital expenditure of £79.2m was offset by a cash inflow from operating activities of £130.7m. Our working capital inflow is driven by trade and other payable increases, particularly as our trade payable days increased following the extension of our supplier terms towards the end of last financial year. In addition, our accrual balances have increased due to inclusion of the trademark infringement legal settlement as this was not paid before the year end, increases in various trade-related accruals due to business growth and following the introduction of free returns in the EU and Australia, as well as timing of payments at the year end. These increases are offset by an outflow from stock due to earlier intake of our new season compared to last year end. The summary statement of cash flows is shown below.

Year to
31 August 2016
Year to
31 August 2015
Operating profit from continuing operations 42.1 52.4
Loss before tax from discontinued operations (10.1) (5.2)
Operating profit 32.0 47.2
Depreciation and amortisation 31.7 23.1
Losses on disposal of assets – continuing 0.8 4.9
Losses on disposal of assets – discontinuing 4.3 -
Working capital 69.1 17.8
Share-based payments charge 4.5 2.3
Other non-cash items (1.7) 0.7
Tax paid (10.0) (2.8)
Cash inflow from operating activities 130.7 93.2
Capital expenditure (79.2) (50.4)
Net finance income received 0.7 0.2
Net cash inflow relating to Employee Benefit Trust 0.7 0.9
Total cash inflow 52.9 43.9
Opening cash and cash equivalents 119.2 74.3

Effect of exchange rates on cash and cash equivalents

1.2 1.0
Closing cash and cash equivalents 173.3 119.2

1 All numbers subject to rounding.


Year to
31 August 2016
Year to
31 August 2015
Technology 60.1 33.7
Office fixtures and fit-out 2.5 1.1
Warehouse 24.4 14.6
Total 87.0 49.4

1 All numbers subject to rounding and exclude results from the discontinued operations in China unless otherwise stated.

We continue to invest in our technology and logistics infrastructure to support our future growth ambitions. The majority of technology spend related to the replatforming programme and the new global fulfilment and Truly Global Retail programmes, while our warehousing spend related to the Eurohub 2 fit-out and improvements to our Barnsley automation technology.