Investor Update

Aug 10, 2021

Slides

Good afternoon, everyone, and welcome to our Capital Markets event, where today we're going to be looking at the supply chain at ASOS. This is the 2nd in our series of capital markets events. And again, we're doing it in a power hour format. Aside from today's event, we'll also be hosting Aneability Capital Markets event next month on 16th September and a full Capital Markets Day on 14th October. So turning our attention to the focus of today's event. This is the first time we are hosting an in-depth look at our world class supply chain as well as the development of it, and I hope to give you a better understanding of our supply chain. The ASOS supply chain team has a huge depth of experience. And from an executive perspective, it is now managed by Matt Dunn. The supply chain team are responsible for inbound logistics, managing our fulfillment network and the development of the future capability. The team are also responsible for the delivery of our propositions and our return processes. We won't be covering anything relating to sourcing today, which would include factories and suppliers. This will, of course, be covered in our Sustainability and Capital Markets event next month. And also, we won't be covering anything relating to our current trading. You have heard us refer to the supply chain as a critical at ASOS to deliver the customer proposition and service. We've developed our supply chain with the customer in mind to deliver a friction free and compelling customer proposition in all our key markets through targeted investment in automation and in tech to improve efficiency and velocity of handling products through our supply chain. Internally, we assess these investments to deliver the productivity of lower cost of handling and therefore improve customer service, which drives greater sales. Before we start, I'd like to remind you of how we view the world. We're not just a retailer. We're not just a platform. At ASOS, we are a destination, a destination at ASOS, a destination that's got 20 fun things covered for all their fashion needs, with all their favorite products and all their favorite brands, a cool place to simply hang out with the best edit of fashion, the best experiences and experiences that are aspirational, authentic, inspiring, sometimes irrelevant and often playful. Our vision remains the same: to be the number one destination for fashion loving 20 somethings worldwide, focusing on our 5 key strategic pillars. We aim to become a truly global retailer, offering design that can't be found anywhere else in the form of our own unique and exclusive ASOS brands, which now includes ASOS Design, of course, Collusion, Topshop and Topman, all on one platform with the relevant product flow all the time. For our aspiring and engaging and citing friction free and personalized ASOS experience, all underpinned by effective, efficient and sustainable model. Today, we'll be honing in on the supply chain that delivers this experience and builds on our effective, efficient and sustainable model. As you'll remember, we announced back in April that Matt will be taking over supply chain as part of his remit. And you've all met Matt before, so I won't go through a full introduction of Matt. I'd now like to hand you over to Matt, who will introduce the rest of the team and give an introduction to the rest of the event. Thank you very much. I hope you will enjoy it. Thanks Nick and good afternoon everyone. So firstly today, I'm really pleased to be introducing you to 2 people we haven't seen before, Two key members of the supply chain team, Matt Rogers and Gary Beveridge. Matt is our Global Supply Chain Director. And prior to joining ASOS, he was a General Manager at DHL and Head of Inbound Logistics at Hausa Fraser. He joined ASOS back in 20 13 as Head of Delivery Solutions and Inbound Supply Chain. And he subsequently progressed through several supply chain roles, most recently as Director Supply chain for U. K. And Rest of World before being promoted to Group's Supply Chain Directory in May of this year. Matt runs all the operational aspects of our supply chain including inbound logistics, our performance center operations in the U. K, Europe and U. S. As well as returns and outbound logistics. And he'll spend some time today taking you through our world class supply chain in a bit more depth. Gary is our Supply Chain Development Director. He has exceptionally strong project management experience having worked as a project manager across the CARP Group, Adidas, Sainsbury's and Asda prior to joining ASOS in 2015 as Supply Chain Development Director. In his role, he leads the strategy for building out our fulfillment network from the initial decision on location right through to fit out and deployment of the fulfillment center. Today, Gary will talk you through some of our development principles for our fulfillment centers along with an overview of our development approach. In essence, across the presentation today, we'll be taking you through our end to end supply chain From the point of product entering our supply chain via inbound logistics, through our fulfillment network and into our delivery proposition And we'll also briefly cover how we handle returns as well as how we are building out our infrastructure for the future. As Matt and Gary take you through our supply chain, there are a few points I'd like you to bear in mind which underpin what you're about to see. The first and perhaps most crucial point is that we have a well invested infrastructure that we are continuing to build out ahead of our requirements. You'll recall that we announced the new build of our Lichfield facility, which will be online early next year and automated by the end of FY2023, with U. S. Automation also projected to come online at the back end of FY2023. These capacity expansion projects in addition to our existing fulfillment center network provide a strong runway for continued growth in all our markets. This can only be delivered by a strong team. And as you're about to see, the team is a high performing one that works collaboratively with industry leading partners across each area of our supply chain. As Nick just mentioned, our supply chain is clearly a key pillar of our overall customer experience as well as being a significant area of investment. The teams have a relentless focus on continuous improvement across this to improve our proposition for consumers and to drive improvements in productivity and cost efficiency. We've achieved a lot already and we have a clear focus on continuing to drive further benefits into the future. And Gary will highlight a couple of those as we go through his section of the presentation. As part of this approach continuous improvement, we leveraged learnings across our facilities, both from the perspective of day to day operations, but also with respect to new builds. And we are always looking for innovative ways to improve and a proven approach to this innovation, constantly trialing new opportunities to unlock proposition or cost improvements. Let me now turn to how we are building the right scale for the future with the current build out to more than £6,000,000,000 of global capacity in the next couple of years. That journey is the next phase of a program of work that has been ongoing over the past 10 years to build that additional capacity Across our key markets of the U. K, U. S. And Europe. We opened Barnsley in 2011 and automated it in 2015. And this provided us with a playbook for our capacity expansion plans with fulfillment centers following in Berlin, in Germany and Atlanta in the U. S. Each of these sites has brought a dramatic improvement to our delivery proposition with automation further improving efficiencies. Our Lichfield build is on track and Gary will show you a video a bit later on that highlights the progress we are making on-site with the build on track to be online early in the New Year. With the addition of our Litchfield site, this will bring circa £500,000,000 worth of additional throughput capacity online next year. And with the full automation of both Litchfield and the U. S, we will build our capacity out to above 6,000,000,000 net sales throughput capacity by the end of FY2023. I'm now going to hand over to Matt, who will cover our fulfillment center operations, delivery proposition, inbound logistics and returns. Thank you, Matt, and good afternoon, everyone. I'd like to start with giving you an overview of our logistics network. Here you can see our regional fulfillment locations in Barnsley, U. K, Berlin in Europe and Atlanta within the U. S. You can also see our returns operation locations, which include 2 sites in Europe and 2 sites in the U. K. In the U. S, our returns operations sit within our Atlanta facility. The addition of our new site in Lichfield further supports our capability and ensures we continue to support business growth whilst maintaining a leading delivery proposition in the U. K. And rest of world markets. We continue to develop infrastructure ahead of requirement, and we've also got plans in place to expand our capacity in the U. S. And U. K, as you've heard. And we are in the early planning stages of our 5th fulfillment center location, which will most likely be located within Europe. Now we will take a closer look at where we source our products from over the world. You have seen this slide in the Retail Capital Markets event earlier this year. This is an overview of our sourcing locations with a balance between short lead and long lead capability. The supply chain team worked closely with our commercial teams to understand any targeted shift in sourcing mix or allocation to build out our inbound supply chain capability ahead of orders being placed by manufacturing partners. We consolidate volume 75 origins to ensure efficiency through our ship. The introduction of SC Air Service in 2020, which combines the use of both modes, has reduced our reliance on premium airfreight year on year. This drives both sustainability and cost efficiencies. 60% of our overall intake is purchased under free on board terms. This means that we are in control of the costs. We pay for insurance and inbound transport amongst other costs. This gives us better price transparency and control over the overall value chain. We continue to work with our branded suppliers to deliver direct to each of our fulfillment centers to reduce any unnecessary transport legs and drive speed to market. Today, over 84% of all intake is delivered direct. This is up from 63% in 2019. The remaining 16% that is not currently delivered direct is as a result of ASOS stock balancing activity, 3rd party brand capability and low quantity orders that we consolidate for overall efficiencies. It's fair to say within inbound freight, we are used to A fast moving dynamic market, and this year has certainly been no exception. I'm sure many of you are aware of the challenges in both air and sea freight markets as a result of the pandemic. Equipment shortages and reduced capacity have led to high levels of disruption, longer lead times as well as heightened pricing. Ocean freight spot rates are up to 10 times higher than pre pandemic levels, and airfreight spot rate levels have doubled. Lead time impacts have also been experienced between U. K. And EU as a result of Brexit, with the additional customs requirements and checks. Pre Brexit, end to end lead times averaged 4 days. At its height post Brexit, this peaked at 20 days. However, this is reducing and is now averaging 8 days. We continue to work We're very closely with EU customs as everyone gets used to the new processes and have introduced multiple ports of entry into Europe with an absolute aim to get this back to 4 days. In response to some of the above dynamics, we have worked on various ways to mitigate these impacts through ASOS. This includes entering into long term ocean freight contract directly with a major shipping line with rates secured that represent a significant reduction against today's market levels. But we haven't stopped there. Introduction of the CES service I described ensures flexibility exists with transit time on longer lead source products. Furthermore, our regimented intake planning process factors in these delays within the forward order book. And our ability to mix into more short lead sourcing, if required, means we continue to be well positioned to navigate through these current market dynamics. Finally, it is well publicized that the U. K. Has experienced a HGV driver shortage. As we do not operate our own fleet and we work with multiple third party contractors, we're We're not currently experiencing issues with this. However, we're keeping a close eye on this with our partners to ensure that this doesn't start to have an impact on our U. K. Operations in the near and medium term future. Going back to the network. My slide earlier gave an overview of the current logistics network. This slide depicts which markets are currently fulfilled by each location. Developing out these regional fulfillment centers has been a major part of how we've evolved our With our key principles of being closer to the customer, working with locally relevant third parties developing automated facilities. With this, we are able to offer market leading delivery solutions to our customers in our key markets, along with reducing our carbon footprint associated with final mile delivery. By adopting this approach, have been able to reduce our emissions by 45% over the past 5 years. And we've been able to introduce improved delivery services into the market, such as next day delivery in the U. S. And a 7 day standard service to Russia. Our network enables us to offer delivery next day delivery services to over 85% of our global customer base. And the fully automated facilities enable us to achieve market leading cutoffs in many of our key markets. I'm now going to give you an overview of our delivery capability. Once orders are dispatched, it's over to our Delivery Solutions team. Delivery Solutions purely focus on the customer, with speed, choice, convenience and sustainability at the heart of what we do. We aim to ensure we have next day delivery services with market leading cutoffs supported by our Premier delivery model. For those of you who aren't aware, Premier is our delivery subscription proposition. For example, in the UK, This is charged at £9.95 and gives you free next day delivery for 1 year. Our Premier customers in the U. K. Account for 60% of our U. K. Revenue. We also aim to offer fast standard services. This ensures competitiveness to local brands. We avoid offering a delivery range at checkout and advise customers on specific day their delivery will arrive. Ultimately, this is more we believe this is more convenient for our customers. Where you can see ranges on the slide, we utilize our in house zoning technology to pinpoint the specific delivery date based upon your location as a customer. For example, in Russia, customers in Moscow and Saint Petersburg will receive a promise and delivery on day 7 versus the rest of Russia on day 9. On average, we achieve over 97% delivery on time against the quoted promise. As previously mentioned, we have developed Click and Collect services in All key markets and continue to add locations across many markets. This gives our customers ultimate choice and convenience and enables them to pick up their delivery at a time that suits them. In addition to the services on the slide, we also offer other services. For example, ASOS Instant, which is a same day service that we delivered to select postcodes within the London area. And we are currently reviewing our ability to highlight a green delivery option at checkout in selected markets. Just to point out, this slide represents our business as usual propositions. Clearly, through the COVID pandemic, some of these propositions have needed to be extended due to freight availability and reduced warehouse outputs driven by social distancing measures. However, we have and we continue to work closely with our supply chain partners to reduce these impacts and we have a defined process to ensure all services revert back to business as usual at the earliest possible time. It's fair to say that it's not only our delivery proposition that leads the way for customers, but also our sophisticated returns proposition and processes. Over 97% of all items returned to ASOS are repatriated to our fulfillment centers and resold to customers. All returns go through a very rigorous inspection process with any item that is not deemed as pristine graded. The issue is then highlighted and passed over to our salvage operations. Our salvage capability includes spot cleaning, ozoning, steaming, seamstress processes to name just a few. Of the 3% stock that is not deemed suitable for resale to our customers, we work closely with various partners to ensure these products are resold, recycled or repurpose, avoiding any unnecessary disposal and sending product to landfill. Our colleagues undertaking core processing Achieve an average KPI of 45 units per hour. This has improved by over 20% since 2019, driven by the deployment of new technology across the network and our focus on continuous improvement across all of our operations. In late 2019, we launched the ASOS My Account Returns experience. Effectively, this enables customers to initiate their return in the ASOS app. In many markets, customers have a completely mobile experience using QR codes instead of paperwork when dropping off their returns to our returns locations. All of these operations require meaningful relationships with our 3rd party partners. Therefore, it is essential that our partners are aligned to our approach and our desire to be the best. The way we approach this is to form close relationships and work with a partnership approach with long term agreements in place with all key third party logistics providers. Partners are selected based on regional expertise and the core services they offer. We intentionally operate with a multi third party logistics provider strategy. This drives greater levels of innovation and shared learnings across our network. These partnerships allow ASOS to focus on resources Focusing our resources on our data, technology and mechanization capability to further enhance customer facing solutions. All third party logistics providers are reliant to the ASOS supply chain objectives with site specific objectives and improvement targets agreed annually. Over the past 18 months, we have developed the ASOS LEAN framework. This drives consistency through operation and tracks progress against efficiency targets, site objectives and agreed service level agreements. We also work closely with our partners to ensure our warehouse colleagues feel part of the ASOS team and offer 1st class welfare facilities across all of our locations with gyms, breakout rooms, pool tables, canteens and even our own basketball courts in Atlanta. Based upon our experience, we believe this level of welfare and college engagement bolsters overall productivity levels in each site and makes ASOS a great place to work. As you will have heard throughout the presentation, we have a clear non negotiable focus on sustainability across the end to end supply chain. In 2020, our carbon footprint reduced by 13%, predominantly driven by U. S. Fulfillment, Reduced airfreight and the use of renewable energy across our fulfillment centers. Further energy efficiency targets have been agreed for the next 3 years across all ASOS owned facilities, And our net zero strategy is underway aligned to our commitments to the British Retail Consortium Climate Action Roadmap. We've also completed a full carbon footprint analysis by delivery service and delivery partner to support us with our aspiration to advise customers of our greenest delivery option. And we have implemented outbound order consolidation within our warehouses for when customers place more than one order over a given period of time. The my account returns experience I referred to earlier means that over 87% of all the orders dispatched no longer require paperwork to be inserted inside the parcel. We continue to work closely with our delivery partners to push final mile deliveries by more sustainable methods, such as the use of electric vehicles and consolidated drop off locations. You will hear more of our commitment to sustainability in the Fashion with Integrity Capital Markets event next month. So to summarize the key takeaways from the operational overview. We have a well invested network, which we develop ahead of time to support business growth. We are well positioned against the current dynamics and headwinds within the freight market. From location analysis For future warehouses to the delivery and returns experience, we put the customer at the heart of everything we do. We focus on our people, investing in welfare and engagement. We have an obsession for continuous improvement to generate enhanced capability and cost efficiencies. We operate with integrity, and we are relentless with our focus to reduce our environmental impacts across the end to end supply chain. This concludes a brief overview of our operations. We would, of course, love to have Hosted today's event in one of our fulfillment centers to really make this come to life for you all. Unfortunately, due to the ongoing restrictions, this wasn't possible. So instead, I'm going to play a short video of our fully automated facilities in Barnsley and Berlin to give you a flavor of what we do and the scale of our facilities. Then Gary is going to take you through our playbook and how we develop these world class facilities. Thank you. Thanks, Matt, and good afternoon, everyone. As Matt mentioned, we are really proud of our facilities, which are world class, and we would love to show you around sometime. Whilst it is impossible at the moment, I hope that the video has at least highlighted the scale of automation that we have in both Barnsley and Berlin. Our approach is to own the tech, own the data and own the automation and then to outsource the other aspects of our sites. At both Barnsley and Berlin, we have implemented proven technology and solutions that allow us to standardize our processes. With each new installation, we take learnings and knowledge into the next site. And in parallel, we are relentless in looking at new and emerging technology to continuously improve our processes. However, Any new technology needs to be the right fit for us, and it needs to have the right level of maturity. The pictures on this slide highlight some good examples of how we have deployed tech to enhance our efficiencies. On the top row, we have the individual cranes in the aisles at Barnsley versus individual shuttles per level in Berlin, which has increased the speed of movement from reserve storage to the pick and face 8 fold. Secondly, on the bottom left hand side of the slide, we have recently added picking robots in Atlanta. And with these, we expect to increase our picking rate by 25% to 30%. And lastly, on the bottom right hand side, We have the robotic arm that we are trialing in Berlin. Rather than looking at these to increase productivity, these will allow us to flex and increasing utilization of resources across the site, which in turn provides greater flexibility to the operations team. From an implementation perspective, with each new installation, we increment the level of automation, which results in an improved return on investment. One of the significant benefits of automation are the improvements in efficiency. As you can see from the charts on this slide, The implementation of automation at both sites has increased both the picking and packing rates. For example, in terms of pick rates, Barnsley has seen a 100% increase and Berlin had a 47% increase. And from a packing perspective, Barnsley increased by 32% and Berlin increased by 35%. Next up, we're going to take a look at the Atlanta operation. What you'll see in the next video is a manual operation, And this will give you a good idea of how Barnsley and Berlin looked prior to automation. There's, in fact, to be fully automated by the back end of FY 'twenty three. From the video and pictures on this slide, you will see that we have introduced some of the automation in preparation for this deployment. I've mentioned we have already complemented the site with low cost robots to increase picking rates. But equally exciting, The planned automation includes a solution known as goods to person picking. As a result, we expect to see an increase in the picking rate the region of 150% versus the 100% that was achieved in Barnsley. In addition to these benefits, Installing part of the automation in the first phase enables us to work closely with the provider to establish and mature the operation with parts of automation in place. Equally importantly, they can be fully involved in the delivery of the fully automated solution, ensuring that it is landed well. So to summarize, why we automate our sites. We liken it to our productivity loop, where investing CapEx drives productivity improvements, which in turn allows us to invest in the customer and drive growth. And it's this growth which resulted in us announcing in October last year that we'll be opening a new site in the U. K. So let's now take a look at how the Lichfield is progressing. As you can see from the pictures on the slide and the video, Lichfield has progressed significantly since we signed the contract 8 months ago and is on track to go live early next year. With all new facilities, the first and most critical step is to determine the location and size to ensure we are scaling the network correctly. We use many criteria to do this: labor availability, transport links and expansion opportunities being a few. Recruitment of the management team for the site by our 3rd party GXO is well progressed with 80% of them already onboarded. This team is a key part of our playbook. And with their support, we will deliver a first phase that can store up to 7,000,000 units and a mezzanine, which you can see in the photos. And from an outbound perspective, we will ramp up to shipping 1,500,000 units per week, supported by Converse, which were in the video and the parcel sorter that you can see on this slide. Involving the 3rd party in this way ensures efficiency and effectiveness from the start of operations. After this, they will optimize and enhance the site with the adoption of our lean framework, which is already running in With the GBP 90,000,000 CapEx that has been invested in this facility, we will fast track the automation in order to maximize capacity. This will provide an end state capacity of 15,000,000 to 17,000,000 units of storage, which is roughly half of Barnsley's capacity. And in terms of throughput, Lichfield will be able to dispatch 4,500,000 units per week, which means will be comparable to Barnsley in terms of output. But due to the evolution of our automated solutions, it will be more efficient per Square foot than Barnsley, which operates on 700,000 square feet, while Litchfield is 400,000 square feet. I hope you've enjoyed getting a taste of our fulfillment centers and a better understanding of our world class supply chain development capability. I will now hand you back to Mike Downey to summarize. Thanks, Gary, and thanks, Matt. So I hope you've enjoyed the dive we've made into our supply chain today. As both of the guys have said, we'd obviously really love to host this session in a facility. But nonetheless, I hope you've seen enough to see how our world class supply chain operates and have a feel for the team that operates it as well as gaining a short insight into how we are building out for the future and how we continue to innovate for our customers, our people and to improve the productivity and cost effectiveness of our supply chain. We now would like to open up the session for questions. For this presentation, we have 2 methods of asking questions. If you have Zoom downloaded, you can ask your question If you don't have Zoom or don't wish to use this method, you can ask your question by written text as per previous presentations by clicking the Ask Questions via Text fun. Just a brief reminder before we kick off that we will be answering questions on the content that we've covered today, which includes inbound logistics, The management of our fulfillment network and the development of future capability. As Nick mentioned, we won't be taking any questions on sourcing as we will cover those in a future update in the sustainability next month nor on current trading. I'd now like to hand over and I think The first question looks like it comes from Charlie Muir Sands from Exane. Good afternoon, guys. Thank you for taking Hopefully, you can hear me okay. We can, and we can see your rather impressive background as well, Charlie. We'll swim afterwards. So I've got a few. I'll limit myself to 3, if that's okay. The first one is you alluded to signing some longer term sea freight contracts Below significantly below current spot rates. But I just wanted to clarify whether those were below what you're currently paying this year, and therefore, costs Should be reducing next year for that. Secondly, obviously, returns rates have been moving around a lot in the industry over the last You or 2. And I just wonder whether you could say most recently how close to normalizing Return to rates are that you're now experiencing. And then the final one relates to efficiency and automation and so forth. I think historically, the best You achieved was warehouse costs at around about 8% of sales. I just wonder once you get All of this automation in place, do you think that, that is attainable again? Or have the costs of running these kind of sites structurally increased? Thank you. Thanks, Charlie. So I think the second one might be dangerously close to being about Current trading and there's probably not more that we can say right now just about where returns rates are. As we indicated in our P3 update, Our returns rates are normalizing, and we'll obviously give you guys a fuller view at the full year. I might hand the question you had about freight over to Matt, if I can do. And I might take the opportunity to move seats while Matt's talking, if that's okay. So I can sit down. No problem, Matt. Yes, good question. So obviously, the market has changed dramatically over the last 12 months. We've been operating with a blended Ocean Freight Price and Structure, we have always committed to long term deals. Now it would be difficult for me to give you an exact comparison, but The rate levels we're talking about would be slightly elevated to the start of last year. But that being said, as you saw from my slides, There are efficiencies in the use of things like sea air and the reduction in premium air freight. So overall freight costs are balanced in that regard. Thanks, Matt. And then Charlie, I'll pick up your last question about, I guess, the cost in the P and L. So as Gary mentioned, We're always looking at how we find incremental efficiencies. He spoke a little bit about what we're doing in Litchfield and then obviously some of the trials We've got running in the other sites. I guess those things have the benefit of offsetting any incremental Cost inflation that kind of comes through over time just through natural inflationary pressures. So from my point of view, there's nothing Structural or substantive that should drive a materially different percentage of sales. I think Although 8% is probably the best we've ever achieved, I think it's probably closer to 9% if you look at it on a kind of normalized basis. The only last caveat I'd apply and you'll have probably heard me say it before is that we Obviously, you're always in a cycle. And as we continue to build our capacity, when such a time is a steady state where all of our sites Automated is obviously something that's difficult to predict and therefore difficult to say exactly when that's going to happen. But we believe structurally all of the sites have the same Structural efficiencies, there'll clearly be different labor rates, for example, in different markets, which will kind of make them relatively slightly different. But we believe they're potentially similar to what you've seen before. Understood. Anything else from your perspective, Charlie, before we move on? Yes, please. If I'm allowed to discard that second question as a Fair enough. Let's give you another one then in return for that one being a reject. I think, obviously, Historically, you've been quite successful as an export model shipping into places like Australia, Russia and so forth. But given, In particular, the disruption of the last year or so, you've become quite commercially disadvantaged versus in country models. Have you given any thought to Establishing dark stores or mini warehouses or do you really just think you just have to tough out this period and hope that eventually The cost and speed to serve in those far flung locations comes back to where it used to be. It's a good and I might cover the first bit and then maybe Nick I might ask you for For a perspective longer term. So I think ultimately COVID has driven a lot of disruption as you said Charlie. And our belief is once that normalizes that our proposition will be competitive again. I think if you actually look at the types of markets we're servicing from a rest of world perspective, they tend to have a mix of models. I think there are very few local providers can necessarily provide the full suite of products that people want. However, flexible fulfillment and all that it brings with it does open up the possibility for us to evolve our supply chain into the future. And one of the things that It possibly brings with it is the potential to have a slightly different logistical infrastructure where you may have some of the things you've spoken about. That's not a decision that we've taken yet. But I guess flexible fulfillment has many benefits, but one of them is it provides real flexibility in our underlying architecture that means we can look at those things. Nick, I don't know if there's anything you kind of want to add to that from your perspective. Thanks, Charlie. Good afternoon. Right now, the in the midst of the disruption in the pandemic caused on the supply chain, Australia, for example, Our propositions look distinctly weaker than the ones did. They used to be around 6 jumbo jets leaving a day going to Australia with our product on. That's now about 6 a week. So that means our propositions are about 7 days longer on average than they should be. That reduces our competitiveness. Our proposition for the Australian customer is with our unique products, ASOS Design, Topshop, Topman, which has augmented it and the offer, which is still very relevant. We expect the propositions to come back as the freight market normalizes. We'll be monitoring that closely. If not, we'll be looking at local partnerships and other solutions to actually restore our propositions. We haven't made any decisions on that yet. We're monitoring it really closely. So it's very important to us that as the world normalizes with its supply chain market, we don't lose competitiveness in some of those territories. I hope that helps. Nothing concrete yet. We're watching it very closely. Have some ideas that we're looking through. Thanks, Nick, and thanks, Charlie. I'm going to do a couple of written questions, but again, we'd encourage anyone that wants to ask a question via Zoom to do so. It's Believe it or not, it is nice to look at people rather than just looking at type questions. But let me cover a couple of the typed ones. So there's a couple of questions from Anne Critchlow at SocGen. The first of those which I might ask you to answer Matt is what percentage of orders are click and collected? And then I might ask you to answer the next one, which is when you launch partner fulfillment, maybe I'll pick up some of it. Do you plan to use your logistics Network to offer warehousing and shipping return services to brands. Yes. So on the first one, in relation to Click and Collect, it's very different in each of the territories we operate in. I'd say overall, it's circa 10%. Certainly, in France, you would be looking closer to 30%, 35% from a Click and Collect perspective. And in the U. K, we're probably around 5% now. So We've seen that shift in the U. K. Reduce over the past year as more people have been working from home, but it's also relatively new in some of the markets So we've only launched it into Germany at scale very recently. So it's a developing proposition that we expect to grow over time. And then in relation to partner fulfillment and the do we plan to use our logistics network to offer warehouse and shipping returns? There's no reason why not. I think that we are focused on what we need to do for ASOS currently, but there's no reason why we couldn't support third party brands with fulfillment models in the future. Any other bit to that? So key plank of our strategy is the ASOS platform. It starts with amazing brands, which is ASOS unique brands augmented by the brands we acquired earlier in the year. The platform is already multi It's been in the process of being enhanced on various ways. First of all, the virtual fulfillment, which is any warehouse to any customer. Not only that's optimizing availability and maximizing customer satisfaction, making sure we also optimize working capital. The next element of that will be connecting brands directly to our platform and the partner fulfill that for us. That will increase our width, increase our offer, increase our availability with less working capital. So that's the next evolution of our platform development. Partner fulfillment coming at the end of the year. Already, the virtual fulfillment I've described live in U. S. And Europe and that will drive. So those are the areas we're optimizing and solving with our platform development. That will give you greater update on when we get to the Capital Markets Day in October. Thanks, Matt, and thank you, Nick. I I think probably one for you Gary, which is could you update on the square footage differences between Lichfield, Barnsley, Atlanta and Germany? And how we're thinking about expansion opportunities in those facilities? Yes. So if we take Barnsley, Barnsley as I say is 750,000 Square Feet. Atlanta is 1,000,000 Square Feet. Berlin is 800,000 Square Feet. And Lichfield is 400,000 square feet. So as you can see, the sites are very different. And that's dictated primarily by the height of buildings. So if you take Atlanta, for example, in America, the height of the buildings tend to be smaller. In terms of expansion, we have multiple options. We can either expand within the building or we can expand external to the building. And as it stands, we're currently focusing all our expansion inside the building to basically sweat the assets that we have. And I think the only other comment I'd make and just in addition to what Garik said is, there is a kind of optimal size of The building, so it isn't that you'd want to have limitless square footage even if you theoretically all you could do and you kind of look to balance the efficiency that goes through one warehouse and the benefits that brings against both maximizing your customer delivery proposition like we've done in Burnley in Berlin and Atlanta, but also just in terms of resiliency. So having the flexibility that Litchfield and Barnes will offer, example, it is an example of how we're kind of managing that risk profile of effectively having too much volume potentially through one site. So there is a balance. Thank you, Gary. A question from Michel Wilson at Berenberg. And again, I might partially answer this just to clarify what we mean by some of the terminology. But then I think the rest of it we'll talk about more when we talk about sourcing the sustainability CME. So the question is the 60% long lead to supply chain might be a surprise To sum for a fast fashion business, can you elaborate on why 40% short lead and 60% long lead the right balance? And how does it impact inventory risk? I guess the clarification I wanted to make is we use the term short lead and long lead really as a proxy For the length of the supply line, really it means where are they located in the world. And so whilst we might use the term long lead, I'm not sure you should see that as a proxy for long lead in a non fast fashion Retailer, even on a long lead product, you'd still be talking about lead times potentially as quick as 6 to 8 weeks depending on the product. I won't go into all of the details, but why do we use different sourcing locations? We use them partly because of where products There are certain products that are only made in certain locations, but we also look to build resiliency across the supply chain. So I understand it's an important Question, but I think it's probably one more appropriately dealt with, the sourcing update. And then the next question is from Rory And at M&G, how much additional sales capacity beyond the €6,000,000,000 outlined is needed to become Truly global as per your long term strategic pillars. Nick, I don't know if you want to elaborate, but I think it's one for the Capital Markets Update in October, I guess the only comment we can make at this point is We are obviously constantly monitoring what we need and Gary's team are constantly looking at what our capacity needs are going to be. And therefore, we're kind of trying to build ahead of demand. So we don't want to support the surprise, but obviously, we are looking at that capacity plan on a dynamic basis all of the time. And I was just going to add something on Michel's point. The sourcing location for various products is normally determined by the skill set. So for example, the shorter lead time in Turkey and U. K. Is normally Jersey. Mauritius is an area that is specialized in Suiting, tailoring and denim, that is clearly a long lead time, but there's a lot of this airfreight from Mauritius. So it means It comes in as quick as it does from Turkey because its airfreight is subsidized by the Mauritian Growth Initiative. And then certain heavy Applique, heavy design, dresses, the higher price points are best done on a cost basis in places like China, India. We also do a mixed sourcing where Bangladesh, for example, we will create blank sweatshirts, T shirts that are held locally to do printing locally. So you optimize the input cost, you optimize the skills and the cost of the product versus the sourcing availability. And so that's kind of how we build it. So I hope that helps Michel. Yes. And we promised much more of a detailed update in a month's time. So the next question and I'm going to kind of call last orders if anyone does have any Zoom questions because we're nearly out of the written questions. So if you can Come through now and we'll try and cover anything in the time we've got left. So next question is from Michelle again. I might pass this one to you, which is how happy are you with the performance in the U. S. Market since opening the Atlanta D. C? Is it on track with your expectations? So We have built a very strong footprint in the U. S. In terms of our physical infrastructure. We've built a strong digital offer in terms of various zonal regions with our tech. We've got strong propositions in terms of day delivery to all the major markets. We clearly would like far greater growth over the last 12 months. Some of that has been let down by COVID, as customers have chosen different products, but we're really confident that the investments we've made over the past 18 months, particularly in the U. S, of being a key backbone to bring the market to where it is now. And we hope for a lot, lot more out of the U. S. Market. Again, I think we'll give greater clarity of our geo strategies when we get to the Capital Markets Day. But clearly, North American strategy is going to be anchored by our work with Nordstrom, the deal we've done with that. That's about maximizing eyeballs and awareness, using our footprint, using our digital offer and maximizing attention and eyeballs for the U. S. Customer. There's only one plank of it. There's way more of our U. S. Strategy that we're in a place to deploy. Now that's something we will talk to you about in October. And I might just ask Matt to briefly expand on That proposition and kind of where it sits in the relative competitive context? Yes, of course. So I think, as you saw from my slides, we're absolutely Obsessed with being the best and having the best cutoffs and the fastest deliveries. I think we see impacts when we have to have Extension of those propositions from a consumer perspective. So we're confident that we're back in the right horse. We've gone in as fast as we can. And I think maybe I to cover the bills, I mean, I think our ability to service next day 90 plus percent of the U. S. Population, as Matt We do believe there's a significant strategic advantage. And it isn't it is genuinely market leading in that context, Which actually neatly leads us on to the next question, which is from Hugo at Saracen. Do you have any data to Show how the consumer responds to improvement in fulfillment and delivery offerings. Is this more powerful than a cheaper offering with weaker delivery? And I probably feel like anyone here could answer it, but I know how much, Nick, you're passionate about the productivity loop of that. So I might ask you to answer it and then perhaps Gary or Matt can chip in as appropriate. Sure. Propositions are really important, but actually it starts with having the product offer that customers want at the right price, right level of newness. It's then augmented by great delivery propositions that are fast. One of the stats that we gave you today, the power of that proposition with a multi brand offer Is the ASOS Premier offer in the U. K. Now delivering 60% of U. K. Sales? So that works brilliantly with a multi brand offer, multiproducts, a delivery solution that customers want that's next day. Now that is clearly a key plank of our international rollout. You can't offer that compelling next day delivery without local tech, local logistics to support it. That is going to be a key amplification for both Europe and also North American growth. So there's an example of how the power of a multi brand offer with a strong platform that delivers great tech, great logistics and a compelling offer like ASOS Premier can drive future sales, future growth and customer satisfaction. I think my 2 builds from a data point of view. One would be, Matt just mentioned it, at periods where we've been unable to sustain our proposition, We see the impact in our sales and we see the impact in our sales and we see a significant improvement in the market. And The second data point we've got is when we extend the cutoff by an hour, I. E, we can get we move next day delivery from 2% to 3% or 3% to 4% or 10% to 11% or whatever it might be. Again, we can tangibly measure the impact that that has. And therefore, what we know is how meaningful an advantage proposition is for consumers for the relevance of our product portfolio. Clearly, there are alternative It's strategies, but we believe that that has ultimate consumer utility as Nick was speaking about. So it's really well supported by the data, I guess, is the point. I think a couple then of concluding questions, both from Georgina. First is how has shift to more seafre impacted lead times amount of market? Can you just cover that really briefly? Yes. So again, as I stated, there are obviously some delays on the Ostraint market now. But what we can't do is necessarily read it to our increasing sea freight as at a lead time. If look at European sourced product, for example, places like Turkey, historically, that has been both freighted into Berlin, into the U. K. And then onward dispatched via air, for example, to the U. S, whereas now we're set to consolidate EU volume and Turkish volume and do sea freight into the U. S. So that increases our overall mix of sea and less reliance on road just due to the fact that we're going now direct to market. So actually, overall, the lead time is probably very similar to that of bringing it into U. K. And freighting it across It is to go see freight direct to the U. S. Front. Thanks, Matt. And then the last couple, one for you, Gary. Can you remind us which part of the tech across the whole of how we operate our warehouse fulfillment centers are internally developed And which a third party kind of breakout how we approach that? Yes. So I'll take what we have in our facilities our third party. We work with a number of different partners to help us build the automation with their tech, to Build a WMS, again, a different partner. So the tech in the warehouse is all third party. However, one key element of that, We own the data integration, and so all the integration, all the data is ours. We outsource the packages to other third parties, but we own the integration and we own the data. That gives us strategic advantage to develop AI solutions at the back of it, which is greater efficiency, greater demand prediction. So that's the key aspect of it. That's the central nervous system of how we go about building it. We own the integration. We therefore own the data. We don't develop all the packages, but we make sure we own the data flow. I think that's a really good way to describe it from my point of view Nick in terms of we own the nervous That is effectively proprietary, but what we're not trying to do is develop our own WMSs or technology to automate because there are people who specialize only in that. But it's the I mean and I've been on a crash course over the last two and a half years and a particularly crash course over the last couple of months in terms of A fulfillment center only works when all of the elements fit together and work perfectly. That's what our capability set is and that's the bit that ultimately defines The speed and efficiency of the operation and it's all the bits working in sync that's really, really important. I think Last question, which I might answer, which is how do you expect to manage stock between The U. K. Sites I. E. Lichfield when it's operating in Barnsley. So I guess 2 important points to make here. The first is that the way that we're bringing Lichfield on stream is relatively measured over time. And therefore, ultimately, Barnsley will there's no hard cutover like there was when we moved from Barnsley to Eurohub or to Atlanta, we will effectively start to bleed volume into Litchfield. I won't go into all the technicalities in the interest of time as to how we're planning to do that. But effectively, we will use a couple of bits Technology one is optimization technology where orders that can be fully fulfilled from Lichfield will automatically be fulfilled from Lichfield. And then over time we'll start flexible fulfillment. So ultimately, what that will allow us to do is make sure that we are balancing our load and our stock profile appropriately across Barnsley and Litchfield. But in the short term, it means that we can introduce Litchfield In a balanced and hopefully relatively risk averse mode. Let me just add a couple of points to that. So a couple of things that's really important. The flex fulfillment means we won't let the customer down, so we can fulfill from any warehouse to that customer, which derisks the transition of the warehouses as well. It wasn't built for that, but it's a happy consequence that we were mindful of of how we did it. Going from building extra warehouses on a solid base is incrementally less disruptive than when we went from Barnsley to Berlin and Atlanta. So that's the benefit of scale with that extra capability. And the middle element of Stockport Management was our TGR program, which will start to give visibility for our merchandisers from needlepoint to warehouse, and that gives us the greater ability coming forward, coming from now of how we manage the product in the right warehouse to mix the customer demand at that point in time. So those are the only things I want to add to Matt's response. Thank you, Nick. And I think That takes us to a power hour and a minute, I think. So we'll call time there. Thank you, everybody, for taking the time to listen to us today. And we look forward to seeing you in around a month's time with the Sustainability CME. So thanks for your attention and I hope you found it useful.