Shares in ASOS PLC (LSE:ASC) climbed over 9% to 245.88p, a six-week high, as the online clothing retailer reported improving profitability in the first half.
Gross margins expanded more than three percentage points to around 48.5%, enabling adjusted EBITDA to increase 51% to £64 million. Losses also narrowed significantly, with loss before tax improving to £138 million from £242 million a year earlier.
However, top-line trends remain weak. Gross merchandise value (GMV) fell 9% year on year, although the company pointed to improving momentum through the period, particularly in womenswear.
Orders are still declining, but average basket values are rising across regions, and new customer numbers in the UK grew 10%, suggesting some stabilisation in demand.
ASOS reiterated guidance for adjusted EBITDA of £150 million to £180 million for the full year, alongside margin expansion and broadly neutral free cash flow.
Net debt increased to £295 million, reflecting higher interest costs and the absence of one-off benefits seen last year.
Analysts at Shore Capital said margin progress and improving customer metrics were encouraging, pointing to increasing sell-through rates and reduced return rates as evidence the strategy is working.
They added that stabilisation of GMV remains key, with profitability improvements needing to be sustained to support the balance sheet.
"We have been pleased to see margin progress continue during H1 FY26F, and the increasing sell-through rates, speed-to-market, and reduced return rates are encouraging for customer satisfaction and provide evidence of management executing its strategy as planned.
"We continue to view the stabilisation of GMV as a key component of the investment thesis, noting progress in the right direction, particularly within core regions such as the UK, and look for sustained profitability to support the now much-improved balance sheet," they said, maintaining a 'buy' rating.