ASOS H1 2026: EBITDA up c.50% as margins widen and costs fall
ASOS has delivered a notably stronger first half, with adjusted EBITDA up around 50% year on year, despite sales still trending lower. Management is sticking with full-year guidance, pointing to improving momentum across its major markets and categories and a sharpened focus on profitable growth.
The headline here is simple: profitability is moving the right way thanks to better margins, lower returns and leaner operations. Sales aren’t back in growth yet, but the trajectory is improving quarter by quarter.
Key numbers from ASOS’s pre-close trading update
| Metric | H1 FY26 Update |
|---|---|
| GMV (like-for-like) | -9% YoY, with sequential improvement: +4 ppts from Q4 2025 to Q1 2026, then +2 ppts in Q2 2026 |
| UK GMV | -5% YoY (outperformed the Group) |
| Adjusted gross margin | 48.5% (+330 bps YoY) |
| Adjusted EBITDA | c.+50% YoY, including negative impact of IEEPA tariffs |
| Fixed costs | More than 10% reduction YoY |
| Supply chain cost to serve | Improved by 150 bps YoY |
| Underlying returns rate | Reduced by c.160 bps YoY |
| Sell-through on A/W stock | +60 bps YoY |
| New customers (top 4 markets combined) | +2% YoY, with sequential improvement in Q2 2026 vs Q1 2026 |
| ASOS.World (UK) | c.3.5m members, 60% adoption; now rolled out to US, Germany and Austria |
Notes: GMV is Gross Merchandise Value (adjusted retail sales plus revenue attributable to Flexible Fulfilment partners, net of returns and excluding sales tax). Basis points (bps) are hundredths of a percent – 100 bps equals 1 percentage point. Adjusted EBITDA includes c.£4 million of provision releases related to warehouse dilapidations.
Sales trend: GMV still down, but momentum is building
GMV fell 9% year on year for H1, but the trend improved each quarter. ASOS highlights a 4 percentage point step-up from Q4 2025 into Q1 2026, followed by another 2 percentage points in Q2. That suggests the bottom may be behind them, with stabilisation in core geographies.
The UK, ASOS’s biggest market, outperformed with GMV down 5%. Womenswear, a strategic focus, outpaced the Group and saw about a 10 percentage point improvement in its growth rate versus H2 FY25. Within womenswear, Outerwear, Evening Dresses and Tops achieved GMV growth year on year – clear signs of product resonance.
Customer acquisition is also ticking up where it matters. Across the top four markets (UK, US, Germany and France), new customers grew 2% year on year, with better momentum in Q2 than Q1. These are encouraging early indicators for future sales growth.
Profit drivers: higher gross margin, lower returns, leaner logistics
Adjusted gross margin expanded 330 bps to 48.5%, reflecting the new commercial model and continued roll-out of the Flexible Fulfilment approach. In plain English: ASOS is buying and selling smarter, and fulfilling orders in more cost-effective ways.
Crucially for apparel e-commerce, the underlying returns rate improved by around 160 bps year on year. That follows actions to improve transparency for customers, which likely reduces “bracket” buying and mis-ordered sizes. Lower returns protect margin and free up working capital.
On costs, ASOS kept its foot on the brake: fixed costs fell by more than 10% year on year, and supply chain cost to serve improved by 150 bps, helped by warehouse optimisation and renegotiated UK distribution contracts. Even with the negative impact of IEEPA tariffs, adjusted EBITDA still rose about 50% – a solid sign that operational fixes are flowing through the P&L.
Inventory looks tidy too. The sell-through rate on Autumn/Winter stock improved 60 bps, thanks to faster speed-to-market and tighter inventory management, leaving stock in a clean and healthy position.
Product and experience: curated edits and a revamped app lift engagement
ASOS is leaning into curation and inspiration to nudge bigger baskets and repeat visits. “The Heart”, a new monthly edit blending the best Own Brand and Third-Party products, has more than doubled the rate of sale versus the standard “New In” range since launching in October. That’s meaningful proof that tighter, styled storytelling converts.
The app has had a major overhaul and is already driving higher net sales per customer, a bigger average order value, and more engagement. New features include Virtual Try On, “Ways to Style”, richer imagery, the ability to save full outfits, and follow brands. Expect more enhancements through the rest of the year.
Loyalty is scaling quickly. ASOS.World in the UK has reached about 3.5 million members (up from circa 1 million at the end of FY25) with a 60% adoption rate, and it’s now been rolled out to the US, Germany and Austria. A stickier customer base plus a higher AOV is exactly what you want to see when you’re chasing profitable growth.
FY2026 outlook reiterated: margin 48-50% and EBITDA £150m-£180m
Management has kept full-year guidance unchanged:
- GMV to show an improving trajectory throughout FY26, and to run 3-4 percentage points ahead of revenue.
- Gross margin to improve at least 100 bps to 48-50%.
- Adjusted EBITDA of £150 million-£180 million.
- Broadly neutral free cash flow.
The gap between GMV and revenue growth implies reported revenue will lag GMV, consistent with ASOS’s mix and fulfilment economics. Neutral free cash flow guidance suggests ongoing investment is being balanced by tighter working capital and cost discipline.
My take: operational corner turned, now the top line needs to follow
This is a constructive update. ASOS is doing the tough, unglamorous work – better buying, tighter logistics, fewer returns, smarter curation – and it’s showing up in margins and EBITDA. The UK outperformance and womenswear traction are exactly where you’d want green shoots.
The bear case is simple too: GMV is still down 9% year on year. Sequential gains are positive, but investors will want to see that trend continue into sustained growth, especially in the US and Europe. There’s also a tariff headwind in the numbers (IEEPA), and the EBITDA uplift includes about £4 million of provision releases, so quality and repeatability will be under the microscope at the interim results.
Net-net, reiterating guidance with higher margins, a cleaner stock position and rising customer engagement is a good look. If the app and loyalty roll-out keep nudging up AOV and order frequency, and womenswear continues to lead, the sales line should start to catch up with the P&L progress.
What to watch at the interim results
- GMV run-rate in Q3: does the sequential improvement continue, and do more markets flip to growth?
- Womenswear sustainability: are Outerwear, Evening Dresses and Tops still growing YoY, and does that strength broaden to other categories?
- App metrics: evidence of lasting uplift in net sales per customer, average order value and engagement.
- Returns rate: can the c.160 bps YoY improvement be maintained as new features and sizing tools scale?
- Cost to serve: further gains from warehouse optimisation and distribution contracts.
- Cash and inventory: confirmation of a “clean and healthy” stock position and delivery towards broadly neutral free cash flow.
- Tariffs: any update on the ongoing impact of IEEPA tariffs within gross margin and EBITDA.
ASOS frames the year around “sustainable, profitable growth”. First-half delivery supports that aim. Now it’s about converting better engagement and curation into top-line recovery, while keeping a tight grip on cost and returns.
