ASOS PLC (LSE:ASC) is promising a gentler return to growth next year after three years of emergency repair work, guiding for higher profits and fatter margins as it keeps a tight grip on costs.
For the year to August 2026, the online fashion group expects the value of goods sold through its platform - called gross merchandise value (GMV) - to improve through the year and grow 3–to-4 percentage points faster than reported revenue, helped by its expanding “Flexible Fulfilment” partner model.
It is targeting a further rise in gross margin to 48–50% and an increase in adjusted EBITDA, a cash earnings measure, to £150–180 million, with free cash flow roughly flat.
GMV is the total amount shoppers spend on the site before returns and tax. ASOS is now using this as its main growth yardstick because more of its sales are moving to models where brands ship directly to customers, meaning ASOS books a smaller slice as revenue but still earns a fee.
The new guidance follows a year in which sales shrank but profits improved.
In the 52 weeks to 31 August 2025, GMV fell 12% to £2.46 billion and adjusted revenue dropped 14% to £2.46 billion.
Statutory revenue was £2.48 billion, down 15%. Adjusted EBITDA rose more than 60% to £131.6 million, giving a margin of 5.3%, but the group still reported an adjusted loss before tax of £98.2 million and a statutory pre-tax loss of £281.6 million.
The bright spot is profitability per order. Gross margin – the slice of each pound of sales left after buying the stock – climbed from 43.4% to 47.1%, helped by selling more at full price and relying less on heavy discounting.
Supply chain costs were cut by about 20% year on year, and profit per order is up 30%.
Net debt has been trimmed from £297.1 million to £184.7 million, helped by the sale of a 75% stake in Topshop and Topman into a joint venture and a refinancing that adds £87.5 million of extra liquidity and cuts annual interest costs by about £5 million.
Customer numbers are still going backwards, down 14% over the year as ASOS pulled back from chasing volume at any cost.
But the company says the people who do shop are more loyal, spending more and sending less back. In the UK, new customers so far this financial year are up around 10% on last year.
Behind the scenes, the retailer has rebuilt how it buys and sells clothes. Its “Test & React” model, designing and getting products online in as little as three weeks, now makes up more than 20% of its own-brand sales, with a goal of 25% this year.
Production times on longer-lead lines have been cut by up to 30%. Around 100 new partner brands joined in 2025, while flexible fulfilment arrangements, where brands or ASOS ship from their own stock pools, are set to grow to more than 15% of third-party GMV.
Digital bells and whistles are meant to keep shoppers coming back: ASOS Live, a TikTok-style shoppable video feed; “Styled for you”, which uses artificial intelligence to suggest full outfits; and ASOS.WORLD, a tiered loyalty scheme already over 1 million members strong.
ASOS shares closed at 247p on Thursday, ahead of the results, having swung around sharply in recent weeks after news of the cheaper five-year loan that underpins the final phase of the turnaround.