ASOS Plc (LON:ASC)
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May 7, 2026, 4:47 PM GMT
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Earnings Call: H2 2020
Oct 14, 2020
Good morning, everybody, and thank you for joining our webcast to cover the FY 'twenty performance. We've got quite a full presentation today to take you through. We're going to give you some extra insight into the impacts we have seen through COVID and also setting out some more detail of our strategy for the next stage of growth. Once we run through the presentation, Matt and I, of course, will be happy to take any questions. So let's get started.
I'll start with a summary of our results for the year just ended. Clearly, it was a year of 2 distinct periods. We started the year knowing it was going to be a pivotal year for ASOS as we work to regain our momentum and focus as we address the issues from the previous year. What we didn't know at the time that this may also prove to be a pivotal year for the sector. If you look at the 2020 penetration of online sales in the U.
K. And globally as a proportion of total clothing sales, we've probably seen 10 years of digital disruption to our bricks and mortar peers in the last 6 months. This year could also prove to be pivotal for ethics in the fashion industry and pivotal of how we work together and how we interact with our customers. That said, I'm proud with the way ASOS has navigated the year. We delivered a record first half as we refocused on the core of the business and strengthened our operational grip.
In the second half, we responded to the challenges presented by COVID with agility and flexibility. FY 'twenty was underpinned by our fight back budget as we called it internally. And it was all going to plan and exceeding expectations in some areas. The first half was our best every 6 months performance through product performance, good customer acquisition, strong cost control, therefore, flowing into great profit. We were quite literally wiping away the painful memories of 2019 with belief, focus, hard work, endeavor and great execution.
Then and great execution. Then the COVID pandemic struck. Initially, this was a supply problem, then a demand problem, and then a potential threat to
our business and
a threat to our people and ourselves. We then set about implementing our business continuity plan. The fundamental beliefs were we have to protect our people and protect them fast. We have to protect ASOS and do it fast. We have to, and we'll get through this stronger.
We have to give our customers the confidence in what we're doing and the steps we're taking. And we have to act responsibly. The phrase we use was, what did we do during a time of national and international crisis? So let me give you a couple of examples underneath those headings. We quickly got all office based ASOSs working from home while keeping the business moving.
We pivoted quickly using virtual technologies. As an example, during lockdown, our ASOSs spent 6 years on video calls. We implemented social distancing in all our warehouses, gaining the confidence of the workforce as we did it so we didn't have to close. Our procedures were soon held up as a gold standard of social distancing in warehousing, and this became the backbone of later government guidance. We implemented models at home, shooting, styling and doing hair and makeup remotely with some excellent results, and we built contingency studios in Lewiston in the event of requiring them.
We rolled out augmented reality models through a collaboration we're already testing, which minimized the need to shoot product live and keep newness flowing. We communicated regularly with our customers as to the measures we were taking to keep our people safe. We did this through Instagram, Facebook, Twitter and every channel our customers are on. We repaid all the furlough monies claimed. We repaid the CCFF that we originally drew down.
We implemented a frontline blue workers discount scheme. We donated around £1,000,000 to charity, predominantly NHS. We sent packages of clothing from our sample rooms to NHS workers. We donated around 100 laptops and iPads to children in Barnsley who couldn't access online education. We ensured all ASOS suppliers were treated fairly during the crisis, and we made sure that all made product had been paid.
The exec team around me were brilliant, and the ASOS as a whole throughout the business reacted brilliantly, too. So that's just a flavor of what we did. The amount of change we undertook was unprecedented, and we've learned much. Many of the processes we developed and implemented will remain in the way we do business going forward. Our approach through COVID and the operational financial capabilities we instilled in the first half enable us to navigate the year and deliver extremely strong set of results.
And I'm pleased to say that ASOS has finished the tumultuous period that we've just been through in much better shape than we could have imagined, with strong sales growth of 19%, the highest ever profit, the highest ever net cash and the highest ever active customers. As a reminder, FY 'twenty was underpinned by these 6 priorities aimed at rebuilding momentum, strengthening our foundations and building which will build for the next build on for the next phase of our growth. I'm pleased with the way the business continues to make progress against all these priorities. Despite the ever changing backdrop, these priorities helped guide our focus as we traded throughout the year. I'm going to call a few highlights out now.
We've appointed 4 new executives to complete our 8 Strong executive team. The new Chief Commercial Officer announcement will be made shortly. We increased our active customer base by 3,100,000 customers. We restored customer engagement through driving product choice, newness and presentation. We worked hard on removing non strategic cost, which Matt will take you through later on.
And we delivered impressive improvements in our warehouse performance, particularly in the EU. FY 'twenty is now behind us, and these six priorities were largely achieved. We've worked hard on resetting and redefining our vision, our strategy and our strategic principles going forward. I'll talk to you later in the presentation through this and how they will guide the next phases of our growth. Without making some of the same points again, this slide demonstrates the progress we've made across all areas of our business, and I'm particularly pleased with our cost base increasing in its efficiency.
This has been critical in translating our strong trading performance into not only strong cash flow, enhanced EBITDA margin and a recovery of our EBIT margin to 4%. Our delivery across the year has also meant we are now in the right position to begin work on increasing our capacity further with a full fulfillment center. I will talk you through more detail on that facility and our approach to development later on. But for now, I'll hand you over to Matt, who will take you through some more business performance detail.
Thanks, Nick, and good morning, everyone. I will start by briefly covering our usual key financial metrics. Obviously, given the unusual nature of this financial year, there are a number of moving parts behind these headline numbers, which I'll talk you through in more detail in future slides. Total sales grew by 19 percent to £3,260,000,000 a significant improvement on the growth rate of the previous year as we re regained our momentum following the operational challenges we experienced in 2019. Gross margin declined 140 basis points, primarily driven by increased U.
S. Freight and duty in the first half, which we have now annualized and locked down category mix in the second. EBITDA margin increased to 7.4%. That is excluding the impact of IFRS 16, to give you a consistent comparative. It is worth noting that this margin includes share based payment costs of £10,900,000 Excluding this non cash impact, EBITDA margin would have been 7.7%.
PBT stepped up from £33,000,000 to 140 £2,000,000 This significant year on year increase in profit was driven by a number of factors, including the strong sales growth and the removal of non strategic costs. We also saw efficiencies from our transformational investments as well as a net benefit from unusually low customer returns rates through lockdown, which more than offset costs associated with the COVID-nineteen pandemic. I will come back to these moving parts in more detail later. CapEx of £116,000,000 tracked in line with the updated guidance we gave back in April, reflecting the deferral of the TGR program and some other smaller projects. Finally, we closed the year in a strong net cash position.
And as a result, our balance sheet is in a materially stronger position as we head into the next financial year. Before we go through the territories in more detail, I wanted to cover the impact of the unusual returns behavior has had on reported sales growth to try and give you a better picture of our underlying growth. When lockdown restrictions came into effect, we saw customers mix quickly into shopping more casual product and our face and body offer. These categories typically have lower returns rates relative to other product categories, and we therefore expected to see a reduction in the overall returns rate. What we hadn't expected was the shift towards more considered or deliberate purchasing, which drove a further reduction in returns rates across all categories.
We provided for returns as usual as we closed P3, in line with the shift in product mix. But given the extension we had made to our returns policy through lockdown, increasing from 28 days to 90, we did not have visibility of the extent of deliberate purchasing. But as we passed the extended returns window, the extent of this became purchasing. But as we passed the extended returns window, the extent of this became clear. As a result, we released the corresponding returns provision into P4.
This chart aims to correctly apportion returns for the period from This chart aims to correctly apportion returns to the period from which the sales derive to give you a better underlying picture. However, the P4 comparable in particular still reflects a degree of uncertainty given we have also made returns assumptions as we exited the year. Overall, our growth across the second half is around 17%, a fair reflection of our performance throughout the whole lockdown period. But as you can see, our P3 sales growth of 10% understated the level of demand we actually saw from customers in this period. In fact, it was closer to 19%.
As we consider P4, it is worth noting that this is only an 8 week period and reflects a seasonal shift from springsummer to autumnwinter. It is therefore important to see it in this context. However, there are a couple of points to note in terms of the 15% growth rate we delivered in this period. Firstly, we have seen customer behavior start to return to a more normal pattern with shops now open again, particularly in Europe, which experienced some of the most restrictive measures. As people become more comfortable moving around, we have also seen returns rates behavior starting to normalize.
However, despite restrictions easing in many countries, it is also clear that our overall demand remains impacted by the disruption that consumers are experiencing, particularly in terms of going out and formal wear occasions. I will cover these two impacts in more detail shortly. I know people are really interested to understand more about consumer behavior over this period, so I want to share with you a brief U. K. Case study to provide insight on how we saw customer behavior evolve through the second half of the year.
The charts on the screen show you some of our KPIs cut by stage of impact from initial impact in March through to a more normal, albeit still restricted position towards the end of the half. The left hand chart shows year on year visits and order growth. We saw an initial slowdown in traffic as lockdown restrictions were announced, which then recovered as customers adjusted to the new situation and they returned to browsing our sites and content. The divergence between visits and orders growth throughout the initial phases demonstrates the more deliberate purchasing we saw from customers, shopping for items they were more confident in keeping given the challenges of returning product during restrictions. As you see, this returns to more normal levels as time passes and restrictions change.
This deliberate purchasing sales. The chart also demonstrates the impact we saw in ABV, driven through a reduction in ASP due to lockdown category mix and the more deliberate purchasing. The reduction in ABV was most pronounced in the core lockdown phase, but you can see that impact still persisted as we closed the year in August. While it's impossible to predict what will happen going forward, we do expect the ABV impact to endure in line with what we saw at the end of this period as it is a function of product mix. Whether returns behavior changes in any future restriction scenario will probably depend on the nature and extent of the measures.
However, we would not expect any impact to be so significant as consumers are now used to the realities of a life under lockdown. I'll now cover our regional performance, starting with the U. K, where we delivered sales growth of 18% this year as we continue to take market share. We saw our share of the overall U. K.
Market increase from 2.4% to 3.9% this year, supported by the spike in channel shift. But we also grew our share of the online market substantially, increasing share there from 8.4% to 9.6% this year. This year, we have split the KPIs by region into halves to provide an indication of momentum before and after the COVID disruption to provide more color on a regional basis. Here, you can see the KPIs reflecting the strong momentum we had built in the first alongside the impact of the half two KPIs I mentioned on the previous slide. Performance was supported by the improvements we made to product and engagement, which resonated well with our U.
K. Customer base throughout the year. Our ability to pivot our product mix towards more casual wear also supported growth in the S. As we look forward, we are watching consumer confidence carefully in the U. K, particularly in the context of the current economic uncertainty and the future potential impact of Brexit.
In the EU, we saw sales growth of 22%, with good growth across the year and a slight acceleration into the second half, supported in particular by the period of really restrictive measures in many European countries. Overall, we are really pleased with our European performance. We added 1,400,000 active customers to our base this year, and momentum was well supported by the notable improvements in product availability this year. Germany and France, our 2 largest countries in the region, returned to growth of over 20% this year, and we also saw an acceleration in all of our top 10 EU countries, aside from Sweden and the Netherlands, who were annualizing particularly strong growth following the release of their local language websites in the prior year. Turning now to the U.
S, where we experienced the strongest disruption from COVID. The half run KPIs give a good indication of the momentum we had built, supported by the progress on improving our stock offer in the region and the rollout of next day delivery, translating into sales growth of 25 percent and a 20 basis points improvement in conversion. The infrastructure we have laid down, facilitating next day delivery to over 99% of U. S. Consumers, remains a key part of our proposition, and we have seen our next day delivery mix increase throughout the year.
As we moved into the second half, the disruption from COVID started, and we saw a twofold impact on our business in the U. S. For our consumers, the economic uncertainty and mixed approach to lockdowns has definitely impacted performance more than we have seen in other geographies. For example, restaurant bookings in the U. S.
Are down some 20% on the year, whereas they are up on the year in Germany. But in addition, as a growing stock pool in our network, our U. S. Hub is still more heavily reliant on airfreight for stock supply than our other geographies, which as you know was severely disrupted. Accordingly, our customer facing product offer was inevitably impacted, which is evident in the H2 step back in conversion.
Looking forward, we have a continued focus on further developing our stock pool in the U. S, but we do expect the global challenge the industry is facing into with regards to product supply following the reduction in output during lockdown to prove a headwind there. We remain confident in the opportunity ahead and how our model resonates with the U. S. Customer, but are clear there is work to do on ensuring our stock offer is restored following the COVID challenges and continues to improve further from there.
Moving finally to Rest of World, where we delivered sales growth of 18%. As you can see, sales growth was somewhat slow in the second half, in part impacted by the the dynamism of our trading calendar. We made changes to our delivery thresholds in response to the air freight disruption associated with COVID as we balance customer experience with basket economics. This drove notable growth in our ABV, but customers made more considered purchases, reducing order growth and conversion. From a country perspective, we saw good growth in Australia despite the challenges associated with getting orders into the country, and the MENA region was a standout performer during the year, supported by great engagement through Ramadan.
Russia was more mixed in the context of an increasingly competitive promotional environment. Turning now to the income statement. I will briefly cover the key lines here, and then I will break out the key drivers of profitability on the following slide. Gross margin, as I mentioned earlier, was back 140 basis points, impacted by the incremental U. S.
Freight and duty charges in the first half a drag from lockdown category mix in the second half. This is because activewear and face and body product is typically lower gross margin. However, it also normally experiences a lower level of returns rates, which supports the profitability of these categories. We have seen an improvement in underlying buying margin throughout the year, although we invested into discounting and promotional activity to stimulate demand on slower turning going out products in the second half of the year. Distribution costs improved 160 basis points.
In the first half, we annualized the benefit of lower U. S. Delivery costs from local U. S. Fulfillment, broadly offsetting the incremental freight and duty costs there.
In the second half, we saw a significant benefit driven by the volume of parcels returned, but this was partially offset with inflated air freight costs as a result of the dramatic reduction in global airfreight capacity. Warehouse costs reduced 100 basis points on a pre IFRS 16 basis. Similar to distribution costs, we also saw a significant benefit from the reduction in returns processing. This was partially offset by inefficiency in our warehouses due to social distancing requirements such as building in additional shift change over time. On an underlying basis, we saw improvements in our Eurohub efficiency from automation and experienced a drag from the fulfillment of U.
S. Orders from our manual facility there. I'll give a bit more detail on that on the next slide. Marketing costs reduced 70 basis points to 3.7 percent of sales. We drove underlying efficiency in our marketing spend through a more scientific approach to testing and more disciplined investment.
However, we also reduced our spend significantly in P3 whilst we worked to make our warehouses COVID secure. The reduction in spend avoided stimulating demand we couldn't effectively service at that time, but that spend will be restored in FY 'twenty one. Other costs reduced 160 basis points as a percentage of sales on a pre IFRS 16 basis we focused on driving greater efficiency and discipline through our cost base. We saw a reduction in staff costs as a percent of sales as we reshaped our organizational structure, removing duplication and inefficiency. We also saw a number of small benefits from the reduction in travel and facilities used owing to COVID restrictions.
Depreciation stepped up 20 basis points to 2.8 percent on a pre IFRS 16 basis this year, and I'd expect a similar step up in full year 2021. As I mentioned, we thought it would be helpful to give some insight on the moving parts within the profit growth we have delivered in full year 'twenty. Starting on the left hand side of the chart, we have driven a 57,000,000 from the incremental sales and associated scale benefits achieved this year. Year on year cost drags were £21,000,000 reflecting a number of small year on year changes. We absorbed wage inflation across the business, most notably in our Eurohub.
We also saw a year on year increase in pay later methods within the mix and an expected step up in tax costs associated with scaling our infrastructure. It is important to note that we have seen benefits elsewhere associated with some of these costs. An underlying basis, we realized £27,000,000 worth of benefit from the improved efficiency in Eurohub following automation. However, we still experienced the year on year drag from U. S.
Orders being fulfilled from our manual U. S. Warehouse rather than Barnsley, which is, of course, automated. This impact is now annualized but will remain a drag on warehouse cost efficiency until the facility is fully automated. We made good progress on removing nonstrategic costs from across the business this year.
The benefit we delivered was ahead of our initial expectations, largely affecting the speed at which the team got after the opportunities and how well they have embraced a shift in mindset towards a process driven approach. This has allowed in turn for disciplined reinvestment back into the business across a number of areas. We have focused our investment on experimentation to better understand how we can improve customer engagement and our proposition in the future. We have also restored a bonus for our people, which reflects the strength of delivery we have seen this year. Looking forward, we are clear there are further opportunities to go after, but having taken large initial steps, these are unlikely to come through at the same rate.
We saw an FX drag of £15,000,000 reflecting the year on year change in our realized rates and the weakening of the ruble, whilst we held prices in local currency. Finally, depreciation increased £21,000,000 stepping up as expected. You can see from these various moving parts the strength of our underlying performance, which has delivered approximately a 97,000,000 PBT. Addition to this, we estimate a circa £45,000,000 net tailwind from COVID this year. We saw both the cost benefit as well as greater efficiency in our in our warehouses and, of course, inflated airfreight rates.
Moving now to cash. We closed the year in a net cash position of £407,500,000 up from a net debt of £90,500,000 as we opened the year. We undertook a proactive equity placing in April, which generated net proceeds of £239,000,000 and strengthened our balance sheet significantly. Beyond this, the cash generation of £258,600,000 was driven by a significant step up in EBITDA and a working capital inflow of £142,000,000 This working capital inflow reflects underlying improvements from our more disciplined approach, but also includes a timing benefit of around £89,000,000 owing to a later than usual build in stock for peak. This is largely as a result of the challenges experienced across the supply chain from COVID and in particular, lockdowns and ongoing social distancing measures impacting infrastructure and our updated guidance across infrastructure and our technology platforms.
Clearly, the outlook is uncertain, particularly for overall levels of demand given the unpredictable nature and cause of the COVID-nineteen virus. Therefore, it is impossible to comment with certainty on the outlook for sales growth over the next 12 months. However, we do feel it is appropriate to call out 2 trends, which we do think are of particular relevance for ASOS and its customers, returns and product mix. As the left hand chart shows, return rates have started to normalize as customers are now more able and more comfortable in returning parcels. Whilst we are keenly aware of the high degree of future uncertainty, we expect this trend towards more normal levels to continue.
It is possible we may see a greater level of deliberate purchasing come through again if full lockdown restrictions return. But as I mentioned earlier, this is unlikely to be to the same extent given customers are now familiar with what down entails. We also continue to see a material shift in product mix and limited demand for our going out product. Our customers shop with end use in mind, so we do not expect the demand for relevant products to normalize until going out returns to normal. Time lines for the containment of the virus and a vaccine still look uncertain, and a number of our major territories are facing into the prospect of a second wave of cases and increasing lockdown measures.
So it is clear that a normal pattern of social events is not going to resume in the near term. As you can see from the chart on the right, the rest of our business is performing strongly with growth of around 30%, supported by the exceptional performance of casual wear, active wear and face and body. We expect to see continued strong demand for these product categories, but it's worth remembering the industry is now facing into supply constraints, particularly in these categories, given the reduction in product produced globally this year. Whilst we have adapted our product mix in the short term to match the shift in 20 something lifestyle, we won't lose our focus on our core customer and the going out product customers love ASOS for. This remains a strategic advantage for us in the medium term, and we remain confident in the strength of our positioning when 20 something lifestyles and social events do begin once again to normalize.
I will now briefly conclude with some points on our funding structure and some financial expectations for the year ahead. Starting with funding, we closed the year in a net cash position of £408,000,000 This level of net cash should still allow us to run a net cash position with our normal working capital cycle, even allowing for the unwind of the working capital timing benefit. However, we recognize that the environment is particularly uncertain and therefore retain our committed £350,000,000 revolving credit facility, running which runs for a further 4 years, which should provide more than adequate headroom and flexibility for potential opportunity and volatility ahead. We expect to invest between £170,000,000 £180,000,000 in CapEx this year, which includes the deferral of TGR from FY 'twenty, commencement of investment into our 4th fulfillment center and the conclusion of the 5,000,000 we have invested in making our warehouses COVID secure on a permanent basis. Nick will talk you through some of the detail on our plans for the new fulfillment center shortly.
We expect to incur another circa GBP 22,000,000 of COVID disruption costs next year, assuming that the impacts year on year are similar for at least the next 6 months of the year, and this impact is built into our expectations for the year. However, the nature and extent of these will depend on the duration of the impact of the virus and the types of measurement measures governments undertake. Turning take. Turning finally to Brexit and our preparations. While we are a U.
K.-based business, we have an increasingly global warehouse footprint, and our EU customer orders are already fulfilled from our Eurohub in Germany. Therefore, the key risks to ASOS are predominantly increased duty on any cross border product flowing into or out of the U. K, depending on the final nature of the U. K. Trading relationships as well as disruption at ports and any impact on consumer sentiment.
In these, we are not alone. We can only really quantify the duty element of these risks, and our estimate, based on WTO tariffs, would be for a circa 25,000,000 pounds impact next year. Clearly, there are other material uncertainties in terms of both supply and demand, but it is not possible at this stage to provide color or clarity on these. Importantly, whilst there are some headwinds, we do not believe any of these threaten our ability to operate. They could, however, be challenging to deal with, and whilst the impact cannot be fully mitigated and we cannot fully insulate ourselves from potential disruption, we are as prepared as we can be.
We have already taken action to remove our reliance on key U. K. Entry points as well as looking at our supply footprint to ensure we minimize product flows, which would incur incremental duty. So just to recap before I hand back to Nick, we have delivered strong operational performance despite COVID driven by improved financial and operational grip. This is reflected in our profit and cash delivery assisted by both the removal of non strategic costs and a one off net COVID tailwind.
However, looking ahead, we are cautious both on the outlook for consumer demand, particularly until the lifestyle and financial stability of our 20 something customers begins to normalize and the mix into going out where is restored as well as the financial consequences of Brexit become more clear. That being said, the rigorous performance management and operational group we have developed as well as the flexibility we have built into our model will serve us well, giving us confidence to navigate an uncertain year ahead and capture the opportunity ahead of us. I'll now hand back to Nick to take you through some of the highlights from the year and how we are focusing our attention
from here. Thank you, Matt. As I said while I opened this morning, we knew this year was going to be pivotal for ASOS. We have rebuilt momentum, and we've strengthened our foundations for future growth. From here on in, we're looking at the next stage.
In the next few slides, I want to take you through our vision, our strategic pillars, our strategic priorities that will support and guide our progress towards achieving this vision. So starting first with vision. We are striving to be the number one destination for fashion loving 20 something's worldwide. If you allow me, I would take I'd now like to take paint a picture of that vision, what it will mean, what it will feel like, what it will look like. It's intended to be a long term vision.
It's like a North Star that will keep us moving forward. It's not intended to be a series of plans or strategies, more like a glimpse of where we're heading and a view of what we think customers will expect from our business going forward. Later on, I'll introduce our strategic priorities and pillars, which are supported, of course, by more rigorous functional plans. So moving to the vision. When people hear of ASOS, they will think of a destination that's got them covered for all their fashion needs, all their favorite products and brands, a cool place to hang out and browse with the best edit of fashion and experiences.
They will think of an entrepreneurial company that's not afraid to turn right when others turn left, a company that acts responsibly, making fashion sustainably and treating people fairly because we will have made that choice for them so customers don't have to. They'll think of a company that's always paid the right wages to people wherever the ASOS brand falls, always ensures that people are given the right working champions diversity and sees itself as diverse as its customers and recognizes that, that diversity is part of our continued success and strength. They'll think of a company that's totally open, share stories about each product, each brand, where it came from, why it was designed, how it was made, who made it, and know that the ASOS Design brand will be manufactured in a closed loop manner with minimal waste. They will think about a business that champions all body shapes, all genders with no one definition of beauty, where ASOS is part of our daily conversations and encourages people to be whoever they want to be. They will know that ASOS is a place where people are celebrated for their differences, their talents, their passions and their enthusiasm.
They will browse, shop and interact with us in ways that we haven't even considered yet, powered by the latest technology like AI, cutting edge robotics that's deployed seamlessly, powerfully, robustly and effectively so the experience intuitively just gets better. They will place orders knowing that the people in the supply chain are looked after by ASOS and its partners, and they feel supported in the work that they do. People will recognize the black and white ASOS noise package is more than just a parcel. It's an experience waiting for someone. It arrives wherever they want it delivered in a carbon neutral footprint using materials that are both recycled and recyclable.
They will think of a company that's serious when it comes to climate change and having a positive impact on the planet and the people who live upon it. They will know we're investing in technology and practices to transform what we're doing, making the experience simply awesome. The more they interact with it, the more it'll feel like it's the only fashion app they will ever need. ASOS will play a trusted part in their digital fashion lives in every channel where they spend their time. They will know that ASOS isn't afraid to take a stand on issues that they care about.
And then they know that ASOS will always make a stand for those voices that deserve to be heard. They will know that ASOS is a company that puts its money where its mouth is, going above and beyond so that every 20 something globally can live their life through our product and the experiences that they deserve. They will have absolute trust in everything ASOS, knowing that none of this is for parent's sake or tick box exercise or to impress anyone. It's just the way we do it. This is what we're striving for.
We believe our customers and future customers will expect us to achieve this. It's a more connected ASOS, a more relevant ASOS, building on our ethics and our values, a cooler, more digitally connected version of our current sales. It will lead us to acquire more customers and compete for share of 20 something fashion spending eyeballs. And being purpose driven, mission led, guided by our values, we will not only be bigger, we'll be more profitable. So moving on to the strategic framework.
During lockdown, we committed the time to fundamentally re examine our business plans and our strategies to win. We asked ourselves, what do we need more of? What do we need less of? And what do we wish we had? Well, we have to continue to be laser focused on the fashion loving 20 something.
We have to continue to create and curate products and experiences that are simply aspirational, authentic, inspiring, sometimes irreverent and sometimes playful. Our fundamental strategy does remain the same because we know we're drilling in the right place, but we do have to flex our model. We have to flex our model for us to succeed and achieve more. We have to continue to give customers what they want, continue to inspire, continue to delight in ways that's difficult for others to copy. I'll develop those explanations later on in the next few slides.
So our strategy will boil down into 5 pillars of our strategic framework. These pillars are: 1, truly global retailer 2, the ASOS brands 3, the ASOS platform 4, the ASOS customer experience and 5, the operating model. One, we have to stay laser focused on fashion loving 20 somethings, but we have to do it globally, accelerating growth across our key markets, especially building on the investments we've already made in the U. S. And the EU.
The ASOS brands, we have to grow our unique ASOS stable of brands and products that incidentally delivered €1,200,000,000 of sales last year by going deeper with existing brands and creating new ones with a particular emphasis on speed to market and price. The ASOS platform, which is already a curated multi brand offer, last year delivered £2,100,000,000 of sales, which is supported by robust tech and a logistics platform. 4, the ASOS customer experience that is inspiring, exciting, personalized and a real point of difference for our brand. This has to be followed through with friction free seamless experience and fulfillment. And the operating model that supports all of this has to be efficient, effective and sustainable.
We've already had our eye on this prize for a while, this destination, And our investments over the previous years have accordingly been deployed to build the tech platform, build the tech capabilities and build the logistics capabilities to achieve the scale to be a truly global retailer. 2,007, we generated In 2007, we generated sales of just over £40,000,000 Over the next few years, we were focused on establishing and growing our U. K. Business. In 2010, when we opened our Barnsley warehouse, we also released our 1st international site, and our growth as a U.
K. Exporter really started to gain traction. Jumping on to 2014. That was when we first started to build out our global infrastructure and capabilities as we grew from being purely a U. K.
Exporter. This started with our 1st Eurohub site in 2014, and then we expanded into our 2nd Eurohub site in 2017. In this phase, we also released localized web and app experiences for over 200 territories. Then in 2019, we laid further foundations by opening our first 4 fulfillment centers in the U. S.
Whilst the build out of our infrastructure has been bumpy at times, we have learned and accomplished a great deal. From here on in, we will continue our journey with the foundations and the backbone we've already put in place and focus on becoming a truly global retailer. Pillar 1 is all about driving that growth across our key markets. So let's start with TGR. TGR, which is aptly named Truly Global Retail Solution, this is our software and transformation program aimed at repositioning the retail platform and the retail processes.
Our TGR program will take the processes and software from that of a U. K. Exporter to a truly global platform, trading across multiple markets, multiple stock pools. It will enhance visibility, stock and intake decisions and enable our teams to give customers a more consistent product experience to our customers across the globe. Availability will be improved through better visibility on intake and commitment across the entire length of our supply chain, from supplier order all the way to intake and product levels in the individual fulfillment centers.
It will give us greater flexibility and agility on managing our pricing by market. It will support our full price sell through with better tools to optimize range and assortment locally in each fulfillment center. And TGR will also unlock our capabilities on flexible fulfillment, I. E, developing the ASOS platform further. I'll come on to this later.
Turning briefly now to our global warehouse infrastructure. As I said, we've been laying the foundations since 14 for this when we opened our first warehouse outside of the U. K. We now have a warehouse footprint capable of offering very competitive next day delivery propositions across U. K, Europe and the U.
S. And in U. K. And Germany, we also offer same day services for our customers. This backbone that we've already built is capable of handling sales of around £4,000,000,000 annually.
We are now planning for the next stage of logistics development. Today, we're announcing a further investment into a 4 fulfillment center based in the Midlands here in the U. K. Sales in our home market have continued at a great pace. Despite reaching almost €500,000,000 in 2015, the sales in the U.
K. Have continued to grow at a compound annual growth rate of over 20% through to 2020. We anticipate that the U. K. Hub in Barnsley, which serves the U.
K. And a number of rest of world territories, will reach its capacity by peak 2023, which is 2 years away. So we're starting this transformation early, ahead of the peak requirement, building on the lessons we've learned from previous transitions. We will build and ramp up this facility gradually to drive the incremental capacity well ahead of FY 'twenty three when it's required. Clearly, the addition of 1 extra FC on a stable base of 3 FCs will be much less disruptive.
And with enhanced technologies, particularly flexible fulfillment, we anticipate the transition will be considerably smoother. 2, the ASOS brands. ASOS isn't just one brand. It's a stable of brands. It's a stable of brands we've been refining and developing for many years, all created in house, all focused on the 20 something lifestyle.
With this strategic priority, we're also aiming to reposition the brand and experience, particularly in the U. K. Sorry, particularly in the U. S. And particularly in Europe to drive expansion.
We'll be looking to drive greater volumes and market share through targeted price reductions and with relevant and exclusive product where we can elevate the brand and offer greater choice and product extension. We're also aiming to launch new brands with our Venture Brands team, build an incubation pipeline for young designers and improve our speed to market and agility of the total ASOS product supply chain. So let me discuss some of the ASOS brands first. This chart will show you the ASOS Stabler brands. Last year, I said earlier, they delivered 1,200,000,000 of global net sales.
Venture brands and the destinations are not included in that total. ASOS Design is at our core. It's the largest segment. Last year, it contributed €1,000,000,000 of those sales. It's the definitive 20 something fashion brand that provides endless ways to be you and has you covered fashionably from going out to working out.
For many years, we've been famous for our going out or going out out dress offer, which understandably during lockdown has struggled. But that said, during the last 12 months, we still sold 32,000,000 dresses, in fact, enough dresses to dress every female in the U. K. And we also sold an ASOS edition wedding dress every 3 minutes during lockdown. In menswear, we've seen another shift away from going out there and what we refer to as keyboard or laptop dressing.
We sold 2,000,000 units of hats, chains, earrings and male grooming products. Just for a bit of fun, that could mean 1% of all the global Zoom calls made during lockdown will have contained at least 1 ASOS product on our male customers. Over the last few years, we've refined the brand architecture, we stopped certain brands, and we developed new ones. Our customers have already noticed that difference. We have a diverse range of brands, speaking to many different 20 something lifestyles and fashion moments.
I could talk you through all of these today, but I'm going to pick out a few highlights. I'm going to pick out highlights from the ASOS 4,505 collection, the ASOS Luxe, ASOS Dark Future. I'm going to run through a couple of our venture brands from the ASOS outside of the ASOS design range, Collusion and our new venture brand, ASOS You. So starting first with ASOS 4505 and Collusion. Both of these brands have been developed and launched in the last 2 years.
And we've continued to see great growth predominantly through sharp price points, great product presented beautifully. But we've also captured a key customer moment here where the end use was one of the key trends during lockdown. Our fashion focused activewear brand, ASOS 4,505, grew 89% during the year, supported by strong customer demand for casual activewear but driven also by option growth of over 50%. We will continue to expand the choice in this brand. ASOS 4,505 has price points ranging from £10 to £35 with the ski range going from £25 to 125.
The ranges are fabulous and getting better and better, and we're expecting this to continue to be a strong growth driver going forward. Onto Collusion. Collusion was created by the Venture Brands team. It's a Gen Z focused brand, which was developed in Collusion with a series of influencers where we simply asked them the question, what type of fashion speaks to you? How should it be constructed?
How should it be made? And how would you like it to be presented? The collusion price points range from £4,000,000 to £40, and during the last 12 months, we've sold over 1,000,000 couples over 1,000,000 couples have purchased the Collusion Twin pieces, many of which we've seen showcased on TikTok. This product, with its focus on unisex, oversized and more casual street fashion, also performed really well during lockdown. It's firmly established itself in the top 10 brands on our site.
In fact, it's regularly in the top most 5 searchable products or brands. It goes without saying that both of these brands have also further pushed our sustainability credentials in the fabrics they use and how they've been made. They've been made with our ethics and our values. For example, Collusion, our size of 90% constructed using sustainable fabrics, using less water, more organic pest control and obviously the correct treatment of workers in the supply chain. And we're also excited about the performance of Collusion and see lots more further growth potential.
Moving on to ASOS Luxe and Dark Future. We developed these also in the last year. They really focus on product for the glam girl and the alpha male customer, and these ranges have grown substantially during the period. ASOS Luxe does the on and off duty glam girl for all end users at accessible price points. Here you can see influencer, Sarah Ashcroft, who recently fronted the ASOS Luxe range and which was a campaign that we were very happy with.
You can also see Love Islander, Luke Trotman, showcasing our latest Dark Future collection. Dark Future is part of our logo carrier offer. It's a fresh streetwear brand created to speak directly to the ever increasing male brand, male obsessed 20 something. In this total category, we've seen a massive growth of over 200%, with something like 90 pieces sold during the last few months. These ranges are beautifully styled with improved influences, pitched at amazing price points.
ASOS Luxe goes from £5 to £55. Dark Future is from £8 for a front print T shirt to £65 for a Borghul puffer jacket. These amazing price points are again achieved through the ASOS ethics and values. As I said, we formed the Venture Brand team 2 years ago with an aim to spin up new brands to augment the ASOS stable of brands, but also to challenge our normal operating principles to target different customer segments, to target different trends and different price points, to trial different ways of design, to trial different ways of manufacture and try different business rules. During the last few months, we set the Venture Brand team a new challenge.
We were looking for a glamorous brand for the generation me, a sexy, sassy customer who's unafraid to express herself. This had to be a brand with strong looks, amazing price points that again pushed our agility, and it was perhaps to be manufactured with ASOS ethics. Well, the team have definitely delivered on agility. You'll see from the chart, the ASOS from design board to launch in 2 weeks' time, it will have taken 14 weeks. The price points range from £8 to £28 and it's 90% sourced from short lead time manufacturers, all of which have been approved by us.
This will give us maximum flexibility to allow us to trade the product. We're all excited by this and expect it to follow the success of collusion with a lot greater agility. On the following slide, I'm going to give you a sneak preview of some of the images. The customers won't see this for 2 weeks, so you should feel quite honored. And there's a couple of images.
You can see how we've styled it. There's lots more in the launch pack to come. So that's just a snapshot for you. Turning to the ASOS platform, our 3rd pillar. We've been building and investing scalable, cloud based technologies, covering desktop, scalable, cloud based technologies covering desktop, mWeb, smartphone on all operating systems.
The tech platform has 200 localized sites, localized with 10 local languages, providing over 25 locally relevant payment methods with a logistics footprint that can deliver fast globally, anchored in 3 major fulfillment centers and soon to be full. I may already mention before, but that platform delivered £2,100,000,000 last year. Currently, the platform is based around our typical buying arrangements though. We're planning to flex this further, a model that will further so the brands can trade in different ways to us. We're referring to this as ASOS flexible fulfillment, and I'll cover that in a later slide.
We're also looking to expand sales from small boutiques to our marketplace offer and look at the potential and business case for customer resale or take back schemes on our platform. We've also launched the ASOS media solution where we're targeting to drive incremental revenue and sales and media spend through co marketing opportunities and partners on the ASOS platform. The strategic priority is also targeting to grow high potential product categories such as face and body, sportswear and outlet. I'll discuss face and body and sportswear categories in the coming slides. Face and body, sportswear and activewear are 2 categories we've really 73% this year, and activewear increased by 73% this year, and Activewear increased by 49%.
And we're building on this opportunity and accelerating our plans. We're looking to build a clear destination for our customers for these types of product. Starting with activewear. It's a huge market globally, and this product is key for our 20 something customers and their lifestyle. We're focused on curating the best edit of sports and activewear and continue to present it in a way that really resonates with our customers.
The three images on the bottom left give you a glimpse of how we present that product. During lockdown, we saw how many customers really took to these ranges. We sold 5,000,000 units of activewear, 3,000,000 pairs of trainers, 1,000,000 pairs of leggings and 500,000 sports bras. We're also approaching face and body in a different way. We approach it in a playful way, a way that really resonates with our 20 something customer, backed up by the best edit of brands, from mass brands to more premium brands.
We've consistently grown our offer of the most relevant brands in this category over the last 2 years, but there's so much more for us to go after. This product sits naturally alongside our core fashion offer, but the shopping behavior and expectations differ so much we've built a team of experts to support our ambitious plans to triple the sales in this area. Moving on to flexible fulfillment. As well as offering great choice through our multi brand platform, we have to develop our capabilities further. Currently, the platform is based around the typical buying arrangement, as I said, and we're building ways to flex this further.
We and brands, we want to build 3 ways to trade: 1, our current buying model 2, a direct plug in with brands delivering to the customer, sometimes referred to as dropship and 3, a hybrid model where we can fulfill and hold product on behalf of those brands. We're referring to this as ASOS flexible fulfillment, where we can first service any customer from any fulfillment center to ensure we are never out of stock, backfilling the ASOS edit and having it fulfilled by the brand if necessary. If we're out of stock of a size 7, your favorite sneaker from Nike and Adidas, our technology will not let you down. ASOS will take the sale. Nike and Adidas in this instance will fulfill that order.
Using this technology, we'll also look to expand the width of our offer on our key brands, improving choice and thereby future sales. We've already started this in the first stage of this strategy by fulfilling orders to the U. S. Customer from Barnsley if we have that product in stock. This will also allow us to show customers products from across our global warehouse network rather than just our regional warehouse.
This will allow us to select merchandise brands and products to our customers regardless of where the product is held. And we are currently trialing this with a handful of brands for the U. S. Customers. The ASOS customer experience.
This is all about enhancing our engaging, inspirational and exciting experience. We deliver this with ASOS Sizzle. We're looking to build on these principles with improved content, improved presentation further personalization, digital price and promotional tools, a development rollout of our premier offer, which will improve and drive loyalty and supported by enhanced insight, analytics tools, greater experimentation and greater AI tools to support the ASOS experience to deliver profitable growth. A couple of examples here. Our apps and sites are built to delight and engage customers as well as providing seamless friction free experience.
Here's a couple of key developments during the last 12 months. We developed ASOS Boards 12 months ago to improve the personalization and curation of customers' saved items. Since offering this functionality, we've seen customers create over 9,000,000 boards. So we've developed it even further as we it was clear how popular it'd become. We've augmented this experience with a sharing functionality, a bit like sharing your favorite playlists.
It can be done through whatever channel you choose, WhatsApp, Instagram, Facebook. And to date, there's been a250,000 sharing experiences. This month, we're going live with customer reviews on products. This has been one of the most requested features for many years. It will support engagement and customer confidence in the products and the experience we're offering.
We anticipate it will be most important in the face and body and activewear development. This year, we've also given customers much better visibility of orders through order tracking, giving them status updates and shipping of returns through the convenience of our app. Inspirational presentation and engaging content has always been the heart of the ASOS appeal. We lost our way back in 2019, and we had to get our creative direction back, But we are very much back on track now. The shots on screen show some highlights with a few of our campaigns.
The recent launch of ASOS Must Haves, which is the season trend essentials, plus the first time we've called out price points. Pushing content through multiple channels with ASOS Must Haves really helps to drive engagement. On the right, there's some images from our recent record breaking TikTok campaign where the ASOS Challenge, ASOS Challenge hashtag, generated to date over 2,000,000,000 views and made ASOS the only European fashion brand to break 1,000,000,000 views. We will now play you a short video which aims to bring some of this experience to life for you. I hope you enjoyed that and gave you a 1 minute respite from listening to me.
On to the next pillar. As I mentioned earlier, the work in building our operating model this year has been critical, and it's been critical in underpinning our profitable growth. It encompasses how we manage ourselves, how we optimize the flow of products and how we optimize our end to end customer journey. I'm going to pick out a couple of areas now. The transformation investments we made in our infrastructure that landed in 2019 have been increasing the efficiency of our model, I'm pleased to say, and we saw significant improvements, particularly in our Eurohub KPIs this year.
And there's more to come. We expect that Eurohub will actually exceed Barnsley on a pick efficiency basis given the development of technology since the Barnsley site was automated. An example of what it's already delivering, it's scaled to the same throughput as Barnsley, and it achieves that with over 1,000 less heads. We set out this year with the key priority of strengthening our organizational executives join us, We've had 3 new executives join us: Robert Birge as Chief Growth Officer Joe Butler as Chief People Officer and Patrick Cylin as our Chief Strategy Officer. And I'm pleased to say we secured the 4th and final appointment to our new executive lineup.
Our new Chief Commercial Officer will be announced very shortly. This year, we've embedded a more robust model for delivering change at ASOS, supported by a cross functional team to drive alignment and momentum. We intend to significantly strengthen our talent and performance management tools as well and employ mechanisms that match the rigor for which we are now managing our business. In terms of culture and values, evolving and protecting this is vital, and we've supplemented our key values of authentic, brave and creative, which will remain at the heart of what we do with a 4th value, discipline. Discipline underpins everything we do, every endeavor, and it's there to support us in ensuring we realize our future goals.
I'm pleased to have people have embraced it, which is really evident with the progress we've made during navigating this challenging year. This year, we tested our agility and speed this year has really tested our agility and speed to market, and we're pleased with how we've managed to pivot our product offer given the lockdown constraints we're working within. We will keep focusing on increasing the agility and increasing the regions, combining short and long lead time by region. It provides us with the flexibility to manage disruption and also optimize the balance speed, quality and cost. This has served us well during the course of the year.
For example, we increased the mix into Turkey for production of short lead time Jersey. We pulled back on sourcing in India, which typically supports more tailored or embarrassed product on a slightly longer lead time. We've invested significantly in 3 d virtual fitting, which reduces our lead times on product, simply cutting weeks out of the time spent on sampling and fitting. Finally, we've established in country quality control capabilities in 5 destinations outside of the U. K, which ensures the fabric's right, the quality's right and the product is right before it's shipped to us.
Fashion and integrity. This has always been a cultural touch point for ASOS or has been for many years, and it represents how we do fashion and how we run our business. It covers product, people, packaging and the impact we're having on the planet. Just going to call out a couple of progress highlights this year. In product, we now have 85% of the ASOS Design products from sustainable cotton in the garments.
We launched our 1st circular fashion range where the garments are designed with the afterlife in mind using monofibers, thinking about deassembly. For example, the metal work on the denim jackets unscrew so they can simply be deassembled and reused. The pattern cutting is designed to minimize off cuts and, in some cases, totally take out waste. It's, of course, a trial as much for us as it is for customers, and we will learn through the process. On people, this area has been a significant scrutiny of late, particularly in the U.
K. I'm delighted we're already ahead of this with our approach. Our principles are very clear. We see our responsibility to all workers in the supply chain wherever the ASOS brand falls. We have taken the opportunity to push transparency harder with our partners in supply chain, further requiring further pushing our platform to ensure we drive good epics.
We're looking for our partners to map to Tiers 12. As a reminder, we define Tier 1 as our main CMT sites Tier 2, approved assembly plants Tier 3, laundries Tier 4, mills and dye houses and Tier 4, raw materials, fields and farms. We already have mapped we already mapped ourselves to Tier 3, and we're in the process of mapping 45. We also require our partners to comply with 5 key principles, and we've raised the bar on this during the year. And we've held several workshops with our partners to assist our partners in compliance.
On Planet, we recently concluded our Carbon 2020 initiative whereby reduced carbon emissions per order by 30%. We're in the process of resetting our new targets for the Carbon 2025 program, so look out for those. On packaging, we've nearly reduced 40% of the unnecessary packaging in our supply chain. We're pleased we have transitioned to over 90% recycled materials in all garment bags and 80% in our mail bags. The familiar black and white noise bags on these bags are all 100% recyclable.
And finally, before we move to Q and A, I'd like to thank you all for staying with us, which was quite a lengthy presentation, I know. But I hope the extra color we have provided this morning has been useful. Color on our vision, color on where we're headed and color on how we're going to get there. To summarize, it's been an absolute pivotal year for ASOS. Rigorous performance management, which we instilled in the first half, allowed us to navigate an exceptionally challenging year.
We delivered record profit and record cash generation. We strengthened our foundations for growth, up weighted our internal capabilities, and we're in a robust financial position. We're now clearly focused on our next stage, our next stage of growth with clear strategic priorities and plans as we continue to progress to achieve the goal of becoming truly global retailer and the number one destination for fashion loving 20 somethings. The tailwind in our lockdown categories will have seen ASOS develop many product areas faster than we originally anticipated, which will help mold our future product offer for customers and in customers' minds and actually give us a greater level of resilience. Long term, we are really well positioned.
As Matt said, short term, we see some uncertainty ahead and some volatility. But with everything we've just said, we're in a strong financial position, and we're well placed to navigate the uncertain consumer environment and capture the opportunity ahead for our business. Thank you. We'll now go to Q and A, where Alison will facilitate.
So it looks like we've got a few more questions and we're going to be able to cover before we need to stop at 10:15. We'll pick up with individuals across the rest of the day and we'll try and cover off as many as we can in the next half an hour. So the first question comes from John Stevenson at Hill Hunt. Warehousing, what level of automation will Litchfield have built in at the launch relative to Barnsley? And what level of sales throughput do you expect to deliver from the site?
Good morning, John. Thanks for the question. So Litchfield will be built out gradually. It will be largely manual site within the next 12 months. And then we'll slowly build in automation and capability as we did in Voluntary many years ago.
We think it will end up probably employing a peak around 2,000 heads and probably deliver a throughput of around 1,000,000,000 net sales.
Moving on to next question from Ben Hunt at Investec. You mentioned further cost savings from efficiencies will be at a slower rate going forward. Stripping out COVID impacts that have caused warehousing efficiencies this year, how far do you think the Eurohub is in terms of reaching the same level of LCPU as Barnsley?
Yes. So I mean, I think Nick obviously showed a chart on the level of efficiency. So the actual throughput of the site is already challenging Barnsley levels. The cost architecture is is slightly different. People get paid more in Berlin.
So that will but it's definitely still got the capacity, therefore, to get to balance levels with a greater efficiency offsetting the pay cost effectively. Probably the best way to think about it is to think about the level of transition costs we disclosed in the first half of the year, which there were kind of 2 elements, the restructuring costs. But if you take that out, the kind of the bulk of what's left would be the efficiency opportunity that's still left to go after in Eurohub, and I would expect that benefit to come through in bulk in next year. And at that point, we would be at the level of efficiency that we would hope to get to in Eurohub.
We've had a few people ask We've had a few people ask about the own design mix. So what did ASOS Design do as a percentage of the mix in FY 2020? And how does that compare to the previous year? Do you
want me to do that as well? Jacob? Yes. So ADOS Design mix was down year on year. So it was around 36%, which was down about 200 basis points compared to 'nineteen.
But that was driven by the category mix dynamics that we've spoken about. Obviously, ASOS Design is a going out led area. It was built around dresses originally, and it's really driven by that category mix. The actual kind of contribution to of ASOS Design in casualwear, for example, is really, really strong. Nick spoke about 4,505 and Collision is various different examples of that.
So it is strong, but that category mix has meant that we've mixed out of that and into brands, obviously, sportswear brands being a good example of that.
Next question comes from Ann Critchlow at SocGen. Given the lower inventory at the start of the year and social distancing in the fulfillment centers, will there be a less promotional approach to Black Friday
this year?
I'm not sure now is the time to announce what our Black Friday approach is going to be because it's obviously competitively sensitive. Probably what I can say though is we are whilst the stock build is later than has been the case in other years, We are building stock, and we are planning for a traditional peak season. We'll obviously adapt and adjust that as we see exactly where our stock levels are and exactly where things sit in the market. But to say more than that probably is too competitively sensitive at this point.
What I'll build on that as well. Good morning, Ann. One of the things Matt referred to in his presentation is how promotionally sensitive the last few months have been. We're geared up to have the agility and flexibility to react if that becomes the same environment for the next 3 to 4 months.
Got a few questions now on the U. S. Market from Anisha at Bernstein. It seems you had too little stock and the wrong mix of stock, too much occasion wear. On the amount of stock with actions, what actions can you take to avoid further issues with freight availability now you're into half 1?
And on the mix, can you explain why you're able to respond better to changing demands in Europe U. K. Than you were in the U. S?
Sure. Good morning, Anisha. Thanks for the question. You will know from previous results presentation that the U. S.
Is dominated as a percentage of mix on ASOS sales. It's historically been around 60% or ASOS Design sales. ASOS Design because it's largely occasion wear, that's the area that has stepped back this year quite understandably. That has fallen dramatically, therefore, in the U. S.
Also the excuse me, for in the U. S. Also the excuse me, on build is several weeks behind that in Europe because of its proximity. So we're working hard on rebuilding stock levels in the U. S.
And we expect when the U. S. Customer can do the things they normally do, they will clearly have the ASOS design ranges waiting for them.
Next one on the U. S. For Amelisha. Will you invest in automation in the U. S.
Warehouse in 2021 as we're investing in the new U4K warehouse as well?
So we will invest in automation in the U. S. We have it in our plans. We just haven't committed to any gauge right now, Anisha.
Sorry, just scrolling through. Another one from Anne at SocGen. How many percentage points lower was the Q4? And what is the current trend?
So I obviously in the charts presented the curve, so you can see it there by month. As is probably evident from that chart, it's not yet back to normal levels, but it is normalizing. It's low single digits, favorable as we kind of exited the year.
A couple now from David Holmes at BAML. Can you give a little more color on how revenue growth has trended in the early part of FY 2021?
No. So I guess, as we've commented on this in the statement today, we've made a solid start. I guess if we've seen trading out of line with the trading we've seen in the first few weeks of the financial year.
Could you scroll up slightly please? Thank you. A few now from Adam at Citi. How is lower ABV impacting your basket economics?
So clearly, in its pure purest terms, lower ABB would be unfavorable for basket economics. But given it's driven by product mix and typically the mix into casual wear at the moment, the lower returns rates associated with those categories would largely offset that. And therefore, I would say, as you think about the ABV impact currently, it's largely neutral from an overall profitability point of view.
Adam also asked, can you explain the 3rd party brands fulfilled by ASOS offer, please, in terms of its economics and whether this is an add for availability or a change in direction?
It's a thank you, Adam. Good morning. It's Now that will obviously be a different margin, but we've monetized some demand that we wouldn't have had before. And then the next part of the strategy is to allow plug in for 3rd party brands, so we can make sure they fulfill on our behalf or we fulfill on their behalf in the hybrid model. Again, that's monetizing demand that we didn't have before.
So it's capturing demand, capturing offer by offering never out of stock where possible. And some of that will increase availability, therefore, some of that will be increased width. Those are the main strategies we're following behind it. Not going to go through the full economics right now. We can develop that with you later.
Final one from Adam at Citi. Any thoughts on increasing advertising income from brands on the platform?
Yes, most definitely. So thank you for the question. You would have heard me refer to the ASOS Media solution. We've already launched that. So we've got some very cool ads that are additive to the journey, and we're looking to make and see the early results from that as it rolls out.
That's the
way we're thinking about our
position, and they're about adding to our existing opposition. So I don't sometimes yes, there's an opportunity on advertising income, but I wouldn't necessarily define it as a completely separate income stream. It needs to be ASOS experience, and we need to approach it in that way.
Next question comes from Mike Benedicte at Berenberg. How has the company bought for the following season given the uncertainty in product mix?
Georgia? Sorry, say it again.
I didn't catch the last one for the rest of the season.
Yes. How have you bought product mix looking forward in autumn wintertime? Yes.
Sorry, have you bought. Yes. How have I bought? So we've I mean, we bought product mix consistent with the mix we were seeing as we effectively we exited last year. Therefore, we've obviously dialed, etcetera, we've dialed down that, dialed down our focus on occasion.
We're pretty consistent with the statistics I showed you earlier on in terms of the mix within P4. Obviously, it's still relatively early in the season, and therefore, we will certainly have a degree of flexibility, particularly post peak, in terms of dialing that up or down. But as I also mentioned, there will be a cap on our ability to dial it up, particularly in the casual wear areas where there is globally constrained product supply. Yes.
Big point. Mike, ironically, as COVID started out, supply problem has been an air pocket of stock as we've talked about internally. A product that just wasn't made and demand has clearly increased for those. The current COVID issue now, let alone what's happening for our consumers globally, is there's an air pocket at start with a less demand or less high available.
Next question comes from Michelle at Berenberg. Mentioned this morning a constraint in U. S. Growth over the period due to a reduction in commercial flight availability for airfreight. Will this remain a constraint into 2021?
Or are there workarounds?
Yes, of course. So I mean, most of the traffic from Europe to the U. S. Is was driven by passenger traffic. Clearly, where there is demand, the carriers the airlines will tend to try and lay on additional capacity.
So we have seen some of that capacity constraint easing, but it still is a constraint. There are other workarounds. Clearly, there are other forms of freight, but they tend to come with timing issues. So we're just working through the mix of all of that. So it's certainly a I guess the way I think about it probably is that there will be a constraint in the very early part of the year, but we'd expect that constraint to normalize over time.
But again, as with many of the things we sit today, it does very much depend on the nature and extent of whatever restrictions governments impose or changes governments make because things can change very, very quickly.
Question now from Simon Bowler at Numis. With regards to returns, the August trend in particular looks very similar year on year. Is this purely mix, I. E, is there any continuing dynamic of lower returns on similar products? So
most certainly, product mix is the biggest driver of it. It does feel like though, and the numbers would suggest there is a little bit of underlying sentiment. But again, I wouldn't read too much into the August we made assumptions about the August returns rate. We will only know what the actual August returns rate is the end of October. So it's an important point to mention that as you get closer to the end of that graph that I showed earlier on, there's a degree of assumption.
So and the honest answer is, Simon, we're going to have to wait and see because not only will what consumers are thinking when they purchase drive the purchasing behavior, but actually what constraints they're operating under when they would look to be returning. So I think we'll be able to give you a fuller update about how that's evolving in our P1 update.
We've got a few people asking about the time lines for the build out of a flexible platform. So Simon at Numis and Emily at Redburn. What are the steps, tech and otherwise, you need to take to build out the flexible platform? Is it a correct read from the presentation that this will be done over time to FY 'twenty three? Is this a function of deliberate strategy or implementation
journey. I'm not going to give any time lines, but we have already started that journey and are doing that on the first stage that I talked about earlier. So as we progress through it, we'll let you know, but we're not going to give any future dates on when it will be in its final stage. One more now
Michelle at Berenberg. So you mentioned in the statement improvements in Germany and France delivery proposition since automation of Eurohub. Are there any further improvements to come across other European markets? And if so, when could we expect these?
Yes. Do you want to take that?
Yes, of course. So I mean it is worth restating probably what our delivery proposition is because particularly in Germany, we are the only people in that sector doing next day delivery in Germany. There still is further opportunity, though, to push cutoff times later. So we are able to do midnight cutoff in some of Germany, but not all of Germany. And then we're also working on trying to give consumers in Germany more flexible delivery slots.
And that's probably the best way to think about it. I'm not sure there are step change improvements to come, but there are opportunities to push cutoff times later for next day delivery and then increase the flexibility with which consumers can receive product either through time windows or more certainty about when the product is going to arrive or extra locations where that product can be delivered. So incremental improvements come across a number of European territories. And as we push volume through, we can push cutoff times later.
Tony Sherratt now would like to ask what do you think the FY 2021 equivalent of the 45,000,000 COVID tailwinds will
be? Good question. Yes, I'm tempted to say I've got absolutely no idea. So no, I think as we've called out today, we are expecting the cost elements of that to continue certainly for the 1st 6 months of the year. And obviously, very difficult at this stage to know what might happen in the second half of the year.
In terms of the returns benefit, which drives a chunk of the tailwind, as I guess I said in response to Simon's question, we are expecting that to normalize. But whether it will continue to be a slight tailwind or not, it's very hard to tell. And I think only time will tell that based on how consumers react to whatever restrictions they're facing into, and that will probably be different country by country. And that does it's an element perhaps we haven't majored on today, but you do see very divergent behavior on a country by country basis. So in our rest of world territories, many of those territories are completely back to normal.
In somewhere like the U. K, we are still seeing that customer sentiment playing a part at the back end of August. And obviously, with restrictions coming in from the U. K. Government, we may well see divergent behavior by geography within the U.
K, let alone for the U. K. Versus other territories. So I think that's the best way I can not answer that question.
Next question is from Rocco at Arete. So it seems like business has done a good job of removing overhead costs within the organization. But despite gross margin is down year on year, 140 bps, despite a less favorable ASOS design mix. So while the fundamental fashion business sees margin down, what confidence have you that more operational cost reduction in FY 2020 will be repeatable? Or how much additional headroom is there for further cost cutting?
Matt? Yes. So certainly, there is future opportunity right across our business. I think last year was year 1 of a multiyear opportunity. But we've done and taken a lot of the quick wins, and therefore, we the opportunities that we want to pursue now are likely to take more effort and be potentially in some ways more complicated or more complex to implement.
So I definitely think that cost savings can be a structural support to margins and our ability to reinvest going forward. But I guess I'm rightly cautious about trying to quantify those challenges of challenges of running a business are probably uniquely complicated at the moment because of all the challenges that COVID brings.
And just to add a bit, Rocco. On the margin, of course, you'll be aware that the last 6 months, during lockdown, have been particularly promotionally sensitive. We've followed that too and participated where necessary. And the product mix shift out of ASOS Design into 3rd party brands, sneakerwear, activewear, all of those things are lower margin categories anyway. So you'll be aware in that analysis.
Question from Ben Hunt at Investec. You once mentioned that warehousing costs could fall to 8% of sales longer term. Does this target still hold today given the arrival of the new U. K. Warehouse?
On the way, Ben. Thank you.
One from Simon at Numis. What is the run rate of marketing spend? You pulled back through lockdown, but are you back to a more normal 4% to 5% of sales? Or is product availability holding you back from investing here?
So there are probably 2 moving parts to answer your question, Simon. So we deliberately, aggressively pulled back on marketing spend through P3 because we didn't want to stimulate demand that we couldn't fulfill. And obviously, we didn't want to jeopardize the health and safety of anyone in our warehouses or in any of our suppliers. We've reinstated that spend, and that will take us back to a much more normal level of spend. However, our spend is, as I'm sure most people will know, is driven by the efficiency and profitability of the clicks that we generate.
And therefore, if we don't have enough stock in a particular category, inevitably, it will constrain our investment into that category. So I guess it is true to therefore say that, to some extent, product availability where we've seen challenges, particularly in some elements of casualwear, probably has constrained spend. And that will be particularly true in the U. S, where, as we've been mentioning, our stock pool is more constrained.
Time for a couple more. So Georgina at JPMorgan. Can you talk about any conversations you've had with Global Brands so far about the more of a platform fulfillment model?
Yes, I can. I'm not going to mention them, but we are partnering with 2 global brands to develop the ASOS platform functionality or the ASOS Flex Fulfillment functionality, I would say. So 2 very large global brands are very keen and they're partnering with us on it.
And Josea Kaixa would like to ask if you've got any aspirations for where you'll be in 2022, 2023 from a sales basis given what we set out this morning.
I mean, as I mentioned earlier, giving sales guides for 2021 is difficult enough without being able to give visibility. But I think, clearly, we prior to the announcement today of the new warehouse, we had about £4,000,000,000 of installed sales capacity approximately as the chart that Nick would have shared with you would have showed. We're building incremental capacity over and above that, which would suggest that we're confident that we have the that we will need that incremental capacity. Trying to predict exactly what it's going to be across that time period is much more difficult, but we expect to be capacity constrained by peak full year 'twenty one, I. E.
November 'twenty two, and that's what we're building towards.
So I think that probably covers off as well. Adam at Citi asking if we still confirm mid term guidance.
Thank you, guys. Yes, I'm not sure we have any mid term guidance. So I think probably the only thing we haven't covered is and margin. So obviously, on an underlying basis, our margin was 3.3%, which is up 200 basis points. Clearly, we're confident that we will be able to step forward the underlying profitability again.
And historically, the business has had a 4% margin target, and I think we still feel confident that we've got the levers to achieve that over time. However, there are lots of uncertainties out there, in particular Brexit, which obviously could change the timing and nature of that somewhat.
Okay. I think that is all the questions and all the key themes covered off. Great. No, sorry. One last question has just jumped in from Emily at Redburn.
Do you expect to be free cash flow positive in FY
So on an underlying basis, excluding the reversal of the working capital phasing, I'm very confident we'll be free cash flow positive in terms of the underlying structure dynamics. The extent of the unwind clearly may impact that, but we'll have to see how that phasing goes. I guess why I'm cautious, Emily, is only because if we are looking forward to where we are at year end next year and where stock builds will sit relative to stock builds, could generate quite a different working capital profile. I'm confident on an underlying basis that the business will be cash generative.
Okay. That's all good. Yes.
Thank you very much for joining, guys. I appreciate you taking the time. Alison will be around to pick up any further calls or comments that you might have. Thanks so much. Have a
good day, everyone.