All right. There you go. You're live. Good morning, everyone. I hope you're all well and safe. Thank you for joining our call to discuss P3 trading this morning. I'm joined on the call by Matt and Alison. Together we'll talk through the performance and focus during the last four months, alongside our outlook. We'll be happy to take any questions at the end. As per usual, can you try and submit the questions through the chat box. We'll come to all the questions as we go through. Let me go to the next slide, please. Let me start with a quick overview of the headlines from P3. Can I just request that people, on listen only can mute please. We don't have any feedback. That would be great. Thank you. Right.
Let me start with a quick overview of the headlines from P3. A little more detail on the backdrop against which we were operating and some of the moving parts. The first point I want to make clear is that our main priority throughout the period was protecting the health and wellbeing of our people, and indeed the health and wellbeing of the people in our wider supply chain. This was reflected in strict social distancing implemented and adhered to across all aspects of our business, all the way from operations in our warehouses, to how we shoot our product on models and how we supported our suppliers. We worked rigorously to manage performance within this context. Naturally, such an approach will come with some constraints, but we believe this is the right thing to do given the nature of what we've all been going through.
Within that, I'm really pleased with what we've delivered as a business. I've been thoroughly impressed by the agility, flexibility, creativity of our teams and the effort they have shown in navigating the business through this crisis. In terms of performance, when we last updated you in April, we had seen sales back some 20%-25% in the first two weeks. I'm pleased that we have delivered a 10% growth for the period in retail sales. Item growth was up 15%, reflecting the impact of a lower ASP from the product mix that we sold. Gross margin was 70 basis points lower than the previous year, which in light of the adverse product mix, is testament to the way inventory has been managed throughout the period.
Our underlying profitability and cash generation through the period was strong and reflective of the operational rigor with which we managed the business in unprecedented levels of uncertainty. This means that despite the incremental cost we've incurred through the COVID-19 period, we're on track to deliver strong profit growth and positive free cash flow for this year. We've been very mindful of the impact of the crisis on all our people and the wider society as a whole. Obviously we will be repaying the furlough support we accessed in April, and we will not be accessing the further furlough bonus that's been made available by the government. I'm now going to hand over to Matt, who's going to talk you through a little bit more detail on the moving parts, the regional performance, and how we adapted our trading stance to manage through the constraints we encountered.
Thank you. I'll speak to you later at the end.
Thanks, Nick, good morning, everybody. I'm going to start with product and demand. As Nick mentioned, when we last updated in April, we showed you two charts that reflected the dramatic change in the product customers were shopping into activewear, casual wear, and face and body, and out of more occasional categories such as dresses and formal wear. This shape of demand continued across the period, reflective of a spring/summer without holidays, music festivals, weddings, or the option to go out to bars, restaurants, and clubs. Growth in lockdown categories has been extremely strong over the period, as you can see on the left-hand chart. However, this demand has come at the expense of growth in the categories where ASOS, and particularly ASOS DESIGN, is most established and best known by customers, product for going out.
The chart on the right-hand side illustrates the relative product mix in our business this time last year. You can see occasional categories far outweigh the lockdown categories as a share of our product mix. Activewear and face and body are reasonably new categories for us, and ones we were still focused on growing our offering in. However, we were really pleased with how COLLUSION and ASOS 4505 in particular performed through the crisis. When you take these two charts together, you can see why the impact from occasional categories was more pronounced to ASOS overall than the strong performance in those lockdown categories that were thriving. Our teams have shown great agility in adjusting our product mix, but the scale of the shift in demand at a time where brands and factories were themselves facing severe disruption and lockdowns was a significant challenge to manage.
We also wanted to make sure that we did not create further issues for our suppliers. The net result was that demand for certain products did outstrip supply and certainly speed of supply. Looking forward, we are working closely with our supplier base to ensure we are positioned with the right product and flexibility to maximize opportunity across the peak period and the season ahead. We will continue to develop those categories which remain a long-term and differentiated asset for ASOS, alongside rebalancing our customer offer to reflect the recent shift in demand. Before we move on from product, the other element that is worth noting at this point is the further basket economic impact of this change in product mix.
The first is the impact on average selling price, which was back 9% in the period, which in most territories flow through to ABV. Beyond this, those categories that outperformed also attracted an overall lowest gross margin. However, this has been to some extent offset by positive changes in returns behavior. Face and body and activewear generally show lower returns rates due to the nature of the product, and whilst we are clear that there could still be a backlog of returns with customers, we have seen a move to more deliberate purchasing, which is why we called out our net item growth for you this morning, as we believe that is more indicative of where underlying customer demand is. Turning now to warehouse capacity. As Nick said earlier, our priority was to protect the health and well-being of our people, and that naturally came with constraints.
One of the main challenges was the significant throughput capacity restrictions in our U.K. and European warehouses. These restrictions came about as we worked to overhaul our processes and operations to ensure effective social distancing in our facilities. Something we did in collaboration with local environmental health agencies, our recognized union in Barnsley, the Community Workers Union, and the Barnsley Council. Our warehouses are automated and mechanized, which results in people being congregated in certain high-density areas, such as pack benches, for example. We had to go beyond just increasing the distance between people, and this took some time to implement. This was exacerbated further in the Euro Hub by the border closure between Germany and Poland, which restricted a number of our workers being able to attend work.
On the chart on the left-hand side on the screen, you can see what our available labor was in comparison to our planned level. Capacity restrictions in our FCs was driving a reduction in ASP and hence an even greater requirement for unit throughput. As a result, we took a number of customer-facing decisions to avoid stimulating demand we couldn't effectively service, to ensure we didn't disappoint customers on our delivery promise, and also ensure no one was tempted to take undue risks across our supply chain. As a result, next-day delivery was turned off for seven weeks out of our U.K. warehouse and five weeks out of Euro Hub. We also added up to 11 days to our standard delivery proposition, something we were upfront with our customers about before the point of order.
Our capabilities here are the cornerstone of our customer proposition, and we are clear that open and transparent communication is key to building trust with this generation and our customer base. We kept them updated on the changes we were making and how we were prioritizing health and safety. Further to these proposition changes, we softened our promotional calendar and reduced our marketing spend, which I will touch more on later. We have made great progress in restoring capacity, and this has allowed us to restore our delivery proposition across all key markets. We are continuing to improve capacity throughput further to ensure that our facilities can support peak trade whilst adhering to social distancing. As a part of this, we will be investing a further GBP 5 million of incremental CapEx to ensure workers are safe as we scale up capacity for peak. Turning now to customer engagement.
We saw good engagement throughout the period across our social media channels and in traffic to our sites. This reflects the strength of our relationship with our customers and our role in their lives beyond that of a transactional platform. In April, we showed you the impact on sales growth in Italy as it went into lockdown, with a pronounced reduction in both conversion and visits. We said we were seeing early signs of a fast recovery in traffic, and that trend continued through the period, as shown by the chart on the left-hand side. We also said at that time we would expect conversion to remain more subdued, reflective of the lack of occasions, holidays, festivals, going out, and weddings to shop for.
The chart in the middle demonstrate that while showing an improvement in year-on-year conversion, it is still back on the year, something we'd likely expect to continue while events continue to be restricted. Turning to social media, we saw strong engagement through our social media channels. We had our strongest ever month for social media engagement in May, with over 9 million likes, comments, and shares, up over 90% versus the previous months, with customers reacting very positively to our content and the way it has pivoted to reflect the realities of lockdown living. As I mentioned earlier, we took a number of customer-facing decisions to manage the constraints. Considering this and our softened approach to marketing and promo in particular, we are pleased that the 0.7 million new customers added to our active customer base in the period.
In terms of a bit more color within that number, new customer acquisition was particularly strong in international territories and those with lower levels of online penetration. Italy and France were particular standouts for us. Lockdown product was a particular appeal for these new customers, and that drove strong growth through those categories. Reactivated customer growth was also good globally, but growth in spend from our existing customers was a little more subdued than usual through the period. We think that this is to be expected given the change towards lower ASPs product and the lack of occasion-led demand to shop with us. I will now turn to a little more detail how these factors played out in our regional performance. Starting with the U.K., there are a number of factors at play, so I'll cover the most material ones.
Reflective of the nature and scale of the U.K. outbreak and the U.K.'s approach to coming out of lockdown, we have seen a continued skew towards lockdown category mix. Given the usual strength of the NDD mix in the U.K., the U.K. also felt the greatest impact from our change in delivery proposition. As we were balancing the impact of our trading stance and proposition globally, we took decisions that did prioritize our international territories over the U.K. For example, protecting promo activity over Ramadan in the Middle East and switching some European territories to fulfill out of Barnsley. Both of these things further reduced our capacity for the U.K., but were important trading decisions to take. Further to that, as our most established home market, there was less opportunity for new customer acquisition in the U.K.
We have, however, seen improvement more recently as the U.K. has started to lift lockdown measures. Sales performance in the EU was strong. Initially, we saw demand held up a little better than in some other regions. We saw a faster and stronger rebound in underlying demand reflective of the easing of lockdown. Good growth in both new and reactivating customers. Turning now to the U.S. We felt a strong initial impact to sales growth here. A bumpier recovery in demand reflective of the divergent approach to lockdown restrictions in the U.S. environment. From an ASOS perspective, our product mix in the U.S. skews further towards dresses and formal wear. We don't yet have an established face and body offering in the region. The reduction in available air freight did cause some disruption to our customer-facing stock offer in the U.S.
A growing stock pool, it still receives a good proportion of air freight from the U.K. This is now recovering as product lands. It did impact product choice and availability in the earlier part of the period. We saw a good recovery in rest of world and have seen the quickest move back towards a more normalized product mix here. The region responded well to the targeted promo calendar we ran, particularly through Ramadan in the Middle East. We took action in the region to protect basket economics in the face of significant increase in air freight costs, which drove notable increases in both items per basket and ABV. I'll now hand back to Nick to wrap up.
Thank you, Matt. Hopefully, that was helpful to provide you more detail on the P3 dynamics. In terms of outlook from here, we continue to focus on trading through spring/summer in an agile and dynamic way. We are preparing for autumn/winter, setting ourselves up to maximize the opportunities ahead. We are working very closely with our supply base to ensure we build the right product offer in the face of a less certain demand profile, protecting those occasional categories that we know customers love ASOS for, but making sure we have greater flexibility to deliver the product that reflects the demand and within the constraints of our supply chain. Progress continues in warehousing to ensure we've got the right capacity to execute over peak, a target we're confident of reaching in spite of maintaining the appropriate level of social distancing.
In terms of overall demand, while social restrictions remain in place, we're cautious on demand for occasion wear until a more normal pattern of social events resume, the timing of which is very hard for us to predict, particularly in the context of a potential risk of a second outbreak. We're also mindful of the medium-term economic consequences for our 20-something customers. We expect continued limited demand for occasion wear for the rest of this financial year. Despite this uncertainty, we're confident that with strong operational grip, we'll deliver much improved financial performance over the year. We expect to deliver substantial year-on-year profit growth despite the significant incremental cost and disruption we've incurred associated with COVID-19. This year, we will return to positive free cash flow. Alongside this, we remain on track to emerge as a stronger, more resilient business.
As we look further ahead, we believe we've seen around 10 years of disruption in the last four months, and we are well positioned in this context. We are now much better capitalized with an increasing and more diverse and resilient and differentiated product offer, and the global infrastructure to leverage going forward. This gives us even more and continued confidence that ASOS will continue in progressing as one of the few truly global retailers in e-commerce. Thank you very much for listening. I'll hand over to questions. Please do submit your question along with your name and institution, and Ashley will pick them up and direct them to Matt now. Thank you very much.
Okay. Our first question comes from Eleonora Dani at T. Rowe Price. I was wondering what we should expect as a write-off amount related to the Boohoo and PLT stock.
You will see in the commentary that we gave in the pack, that we're not expecting any significant COVID related stock write-off. We probably will exit this year with a much cleaner terminal stock than we've done in previous years. This is also including any potential write-off from the Boohoo stock. We're not, of course, going to quantify all of those numbers for you, but just note that we've got that. We are mindful, and we've taken the impact of that during our year-end projections.
Next question is coming from Rocco Forte. From a cash flow P&L perspective, can you talk about the furlough impact and how this impacts 2020 PBT, and when it will be paid back in FY 2021?
Do you want me to do that, Nick?
Yeah, sure. From a PBT perspective, the benefit will not be in our 2020 PBT. As we just work that through with HMRC, but it won't affect 2020 PBT.
Next question is coming from José at CaixaBank. Asking if you can talk a bit about sales performance in June in order to assess the evolution throughout the period.
Do you want me to do that one, Nick?
Yeah, please.
In terms of how to think about momentum through the period and potentially the exit rate, which I know is a topic everyone's very interested in, it is fair to assume that the exit rate is stronger than the average for the period. As we flagged in the statement, and hopefully is clear from the call, we're still seeing quite a significant impact on occasion-led product. Therefore, we're not necessarily trading at the level we would have been pre-COVID. It gives you a feel for where that dynamic might sit.
Next question comes from John Stevenson at Peel Hunt. Can you give some more clarity on the removal of non-strategic costs and marketing spend versus one-off COVID costs and the contribution this is making to profit growth?
I think that's Matt again, yeah.
It's Matt again.
In terms of non-strategic costs, everybody hopefully saw the momentum that we delivered in H1, and obviously we recorded a record PBT supported by that momentum on strategic costs. That has definitely continued into H2, both the benefits that we derived in H1, but also we've continued to make progress on that. In terms of the other moving parts in H2 profitability, we have seen a benefit from the dampening of our marketing spend and our promotional mix through the period, as is probably clear. We've also seen the benefit of an advantageous returns profile through the period. Those things have been positive for PBT. However, we've also seen material incremental costs associated with COVID, and they've been in two particular areas.
One is, as we've taken the social distancing measures we just described, that has had an impact on the cost in our warehouse, and that's to do with the staggering of shifts, that's to do with the incremental cleaning we're doing. There's quite a lot of incremental costs going in there. As I flagged on the call, there will be some further incremental costs to go in, and we're assuming those costs continue for some time. Also, we've seen a significant incremental cost on air freight. Therefore, particularly in rest of the world, we've seen that incremental cost flow through to our P&L. As I also mentioned, we've sought to mitigate those impacts through other actions we can take, but they have had a material impact on our P&L. Those are the moving parts in terms of profitability.
If you take those in aggregate, I think it's fair to say that the non-strategic cost momentum that we've got has underpinned the margin performance that we're guiding towards today.
Next question comes from Michelle Wilson at Berenberg. Have you seen any impact on sales or traffic since dropping Boohoo products? Have you or are you changing the way you communicate with customers in light of the Boohoo supply chain allegations?
Thank you, Michelle. No, we've not seen any material change in sales or traffic over the last seven days that are discernible in relation to the Boohoo impact. Your question's gone. What was the second part of that again?
Are we changing the way we communicate with customers in light of the allegations?
Sure. Five years ago, ASOS reenacted the Fashion with Integrity, which has four pillars. It's about people, it's about products, about packaging, and it's around a route to net zero carbon. We've been making great progress and invested a lot in all of that over the last five years. One of the things that we weave into our communications, and we're going to do more of that, we were planning to do more of that anyway, was just telling those stories about how we protect people in supply chains, how we build our products with an end use in life, how we have significant sustainable sourced cotton within our product, how all our garments are capable of being recycled, and how our packaging is recycled and all the progress we're making, all of that.
We're going to continue to dial that into our communication, and we were doing that anyway, but in the light of the Boohoo allegations, it's ever more important that we tell those stories to our customers about the work we're doing on their behalf.
Next question comes from Rebecca McClellan at Santander. How are you expecting the promotional environment to evolve from here? What are you expecting in terms of discounting activity through P4 and into next financial year?
I'll pick that up, Matt.
Yeah, sure. As is hopefully evident from the charts, we're now trading unencumbered, and in that sense, we've restored a more normal promotional calendar. I think it's also fair to say that the promotional environment is busy. There's a lot of activity out there, and therefore we are expecting a relatively high level of promotional intensity in P4, but not necessarily unusually out of the ordinary. Rebecca, being able to be more specific about what might happen into autumn, winter, I think is much less clear. I think clearly the spring-summer dynamics in part are dictated by people's stock positions going into spring, summer, and obviously, the autumn, winter cycle will be dictated much more by people's positions going into that. I guess what I can say at this stage is we're anticipating that there will be a normal peak period.
It will still be a key peak for customer acquisition, and we're still expecting that peak associated with Black Friday trading to the Christmas period, and we're preparing for that in the way that we would normally prepare for that. The extent of that, the product mix, are the things I think that are uncertain, and we're preparing for peak with building in as much flexibility into our operations as we possibly can do, because I think the hardest thing to predict is where product mix is going to be, especially in light as we flagged in terms of any potential second waves in territories, et cetera. Probably flexibility is key.
We've got David Holmes at Bank of America has asked a similar question, but a brief follow-up. Have we noticed any change to that since physical stores have reopened in terms of the promotional environment?
Not a material difference, no. People were already promoting quite actively in the run-up to that period. We haven't seen a particular material shift post the stores opening. That doesn't mean that will change. I guess as we get towards the back end of the season, you may find that store dynamic becomes more significant, but currently hasn't generated a material shift.
Got another question from Michelle Wilson at Berenberg. Given free cash flow positive in FY 2020, looks like you could have significant net cash at the year end. What are the priorities in deployment of that cash?
Do you want to answer that?
Definitely. I think the priorities are similar to those that were outlined at our half year results and associated with the fund raising, is the net cash balance will give us the flexibility to make sure that we can prepare for future growth. Within that, it will give us the ability to prepare and trade through peak. Ultimately for us to be able to deploy that investment where we see attractive long-term returns. To be more specific than that at this stage is probably not right. We'll obviously give a fuller update at the full year results in terms of how we see next year and what our balance of investments and so on will look like for the next year and beyond then.
Question now from Geoff Ruddell at Morgan Stanley. Kantar data suggests that the U.K. online clothing market grew significantly in the three weeks to the 31st of May. Do you accept that ASOS has been losing online share during P3 in the U.K.? Why do you think that is?
Do you want me to answer that?
Do you want to take that, Matt?
Yeah.
That's not a number that makes sense to us. The data we're seeing would suggest that the U.K. online fashion market has been significantly impacted by COVID-19. It's very hard to get reliable data which captures the full remit, particularly what people are seeing on app, for example. Our assessment would be quite different from the way you've positioned the question. Our belief, based on the sources we're seeing, is that we've probably actually gained share through the period. It's not something we're able to be categoric about because there isn't a reliable data source that gives you a full picture of what's happening in online fashion.
Next question from Aneesha at Bernstein. Are you continuing to see high demand from partner brands looking to sell excess inventory, or has this tapered as we go into autumn winter? Do you expect to have materially higher number of partner brands by the end of this year?
One of the issues we have found with our third-party brands is actually less product available from the supply chain. Our outlet business has been very busy booking some excess, actually on full price. We found some of that has been substantial restrictions. That makes a lot of sense, if you think about when COVID-19 was first talked about back in February. It was a supply issue in China, as many of the manufacturing units closed. As it swept across Europe and the rest of the world, other factories, our own factories, including the factories of third-party brands, also closed down, which created a restriction in supply. We're working hard with the outlet team to try and pick up whatever we can, and do more deals than ever before. I've been very, very pleased with the agility those guys have shown.
In terms of full price stock, there's actually been a restriction in the availability of supply, particularly in the categories that we've been chasing, such as casual wear, such as sneakers, active wear. It's been a bit of a concern over the recent weeks.
Next question comes from Rachel Burkitt at Zeus Capital. Could you clarify how much, if any, of your product is sourced from the UK and Leicester specifically?
Yeah. We have about seven factories in Leicester, 10 suppliers U.K., seven in Leicester. The sourcing mix is about 1.5% of our total sourcing.
We've got three questions here from Simon Bowler at Numis. The first question, you acquired a lot of customers over peak last year. What is your sense of retention of those customers?
Matt, do you want to take that one?
Yeah. It is somewhat skewed by the COVID period, as I flagged in the opening remarks, we've definitely seen an impact on customers not spending as much on the going out area. However, notwithstanding that, it does feel like the profile of the customers we acquired in peak last year would have a similar level of retention dynamics to our broader customer base. Therefore, the early signs are quite promising that those activities will yield long-term value to us in the way that we would have hoped they would.
Is that two are also around the profile of those customers, which I think you've covered off the second one in terms of how they're behaving with regards to the normal order size. Number three, should as things normalize, would you plan to drive customer acquisition harder than usual, given the theoretical acceleration in channel shift we're seeing through this crisis?
I think the answer is ultimately yes to that, in the sense that the peak period is when customers are most likely to experiment with new brands and new sites they've never tried before, and therefore, we do see the peak period as a key acquisition period as we do every year. I guess, the channel shift hopefully means more people are open to that experience than was the case last year. My only caveat, I guess, is the macroeconomic environment and the amount of uncertainty makes it hard to be categoric about that. That's certainly how we're setting ourselves up for that situation.
Next question from Olivia Townsend at UBS. Can you give some more detail on the gross margin bridge, for example, the impact from geographical mix into design mix, foreign exchange impact, as well as promo and product category mix?
I'll start with you, Matt.
I can, although obviously we'll give a fuller update at year-end. Let me kind of give a sense of it. The key drivers in gross margin are product category mix. That's the biggest impact. As typically, occasionwear tends to be high priced and high margin largely. I guess the converse of that is that a lot of activewear and face and body has a low returns rate, as I previously flagged. While it might have a margin impact, it doesn't necessarily have an overall detrimental profit impact. We've also seen some benefits from a less intense promotional calendar, which will have partly offset that.
I think as you move forward into P4 and thinking about that, we will see a kind of FX impact in P4, which is probably the only other thing to be aware of in terms of that kind of gross margin dynamic going.
Next question is from John Stevenson at Peel Hunt again. How are you planning for peak in terms of mix, stock commitment and Black Friday?
I'll take that. You'll see my outlook comments while the social restrictions, which basically means our customers will not be able to do the things in the same way they did once before, therefore the demand for occasion wear is going to be muted. We are planning that, but we're dialing up all the other categories, sportswear, casual wear, active wear, face and body, that are showing excellent growth as Matt's chart showed earlier. That's how we are approaching it to the end of this financial year and therefore Black Friday. What we're also doing is working on some near shore sourcing to ensure we have greater flexibility, particularly in Turkey, so we can react on some of those juicy categories far quicker than we would have done normally.
Okay, two more to go. We have one more from Simon Bowler at Numis. Have the customer acquisition trends broadly mirrored the revenue trends in terms of the regional split?
It is worth trying to split it into two component parts. Customer acquisition trends have been stronger than revenue trends overall. Where we've seen more muted trading is in our existing customer base, who would typically look to us to buy the stuff that they're going to buy for going on holiday or going to Glastonbury or going out. That's where we've seen the impact. We've sort of seen that reflected in the kind of net number, but we've seen that mix between new customers and shopping from existing.
Final question in terms of what I've got on screen, again, Michelle at Berenberg. Clearly, there was huge uncertainty at the beginning of P3, and you had to take actions with no visibility. If you could do P3 again, what would you do differently?
Good question, Michelle. Going back to that moment in time, the thought process we went through were, one, first of all, protect supply. Secondly, it was then how to digitalize and work from home. It was scaling down, protecting costs, and then it was very quickly ensuring the organization had the right amount of liquidity for what was a very uncertain time ahead of us. Looking back, we acted with an abundance of caution, which is what we thought was the right thing to do. We acted to protect the health and well-being of our people, and the wider supply chain. If we could do one thing, I think we'd have probably placed more casual wear, more sportswear, more face and body. That would be the one thing that I wish we'd have done. We acted appropriately on occasion wear.
We called that one right. Actually, the lockdown categories, we had the ability to sell far more, and if we'd have gone back and changed our order profile, it would have been on those categories.
I think the only build I'd have on that is even if we placed the orders, though, I'm not sure that we would have necessarily got them because the restrictions that very many of our suppliers had.
Yeah.
It's not certain that even if we'd had the foresight to know exactly where the category is going to land, that we could have sourced it, because particularly some of our global partner brands were at maximum throughput in their own warehouses, and therefore, we just physically couldn't have taken any more product, even if we'd wanted to.
Okay. I've just had two more pop in. We'll take those, we'll wrap up there. This one comes from Aneesha at Bernstein again. Given the stronger sales growth and positive free cash flow outlook, will you still be deferring TGR CapEx as planned earlier this year?
Yes, but not for cash. We delayed the launch of TGR because we felt trying to launch TGR in a period where everybody was working from home would have a risk profile that we would be uncomfortable with. Therefore, we took the decision to delay TGR into next year and the launch of it. In that sense, we still think that's the right decision because we want to make sure that when we do implement TGR, we do that with an appropriate risk profile. It's not driven by cash flow considerations, it's driven by operational considerations and trying to make sure we land it in the right manner.
Final one, which I think you've touched on to some extent, but from Rebecca McClellan at Santander. What changes have been implemented, if any, in order to increase procurement flexibility given the uncertainties regarding demand mix?
I talked about the agility of some near-term short sourcing in our core product procurement. As well as that, Rebecca, during COVID-19, we've also learned a lot. One of the key pivots we made in the studios is doing models from home and building extra studios in our Leeds and Nottingham. A lot of our processes, we've replumbed them in a more digital way. Those are more efficient, and those are going to be a lower cost solution for us. As well as the procurement change we just talked about, there's an awful lot of good things we've learned in the way we do business that we're already implementing and staying with going forward.
I think, again, if I can build on what Nick said, we said in April, and I think our results are a testament to this, that we can regear our business on a six to eight week cycle. We'd love that that cycle was shorter than six to eight weeks, but I think we have regeared our business on a six to eight week cycle, and we're planning even more flexibility as we head into the peak period. I think we've demonstrated that actually we do have good flexibility and agility in a number of areas, as Nick has pointed out, and we're planning in that way, and we're planning to have even more as we go into the future.
Great. That's all the other questions I've got. Thank you.
Okay. Thank you, everyone, for joining. Just to summarize, as I said at the end of my outlook session, as we look further ahead, there has been substantial digital disruption in the retail market over the last four months. We are very well placed to capitalize on that. We are well financially capitalized. We are increasingly more diverse and resilient in our product offering. Some of our categories that we were building have had a great performance. This gives us continued belief in the confidence of ASOS will continue to progress to be one of the few truly global leaders in retail. Thank you very much for listening. Please stay well and safe, everyone. We look forward to speaking to you all soon. Thank you.