ASOS H1 FY26: Transformation Bears Fruit with 51% AEBITDA Growth and Confirmed Full-Year Guidance

That is exactly what happened here. GMV, or gross merchandise value, fell 9%, while adjusted revenue fell 14%. Revenue looked worse than underlying demand partly because of this business model shift, not just because customers bought less.

ASOS supply chain savings and returns changes are doing real work

There was solid operational progress too. Supply chain cost to serve fell by 150bps year-on-year, helped by warehouse optimisation and renegotiated logistics contracts. Berlin fulfilment automation is expected to deliver around a 10% cost saving, equal to about £2.5 million per annum.

Returns are another area where ASOS has clearly got more disciplined. The new returns policy and transparency tool helped improve the underlying returns rate by 160bps in H1. That matters because returns are expensive in online fashion, eating into margin and creating extra handling costs.

Management says profit per order rose by 30% year-on-year. That is a very useful sign because it shows the business is extracting more value from each purchase rather than relying on volume alone.

ASOS UK sales, womenswear momentum and customer growth trends

The weak spot is still topline growth. GMV fell 9%, active customers dropped to 16.5 million from 18.2 million, total shipped orders fell 11% to 26.3 million, and conversion slipped to 2.8% from 3.0%.

Even so, the direction of travel looks better. The UK, ASOS’s biggest market, outperformed the group with GMV down 5%. Womenswear, which is almost three-quarters of group GMV, delivered around a 10 percentage point improvement in growth versus H2 FY25.

New customer growth is the more encouraging read-through. In March, new customers were up 9% for the group, the first month of growth since September 2021. In the UK, new customers were up around 10% year-on-year, while churn, meaning customer losses, improved by 150bps in H1.

That does not guarantee a sales recovery, but it is the sort of lead indicator you want to see before the revenue line turns positive. ASOS is basically saying the customer engine is starting to restart.

ASOS cash flow, debt and balance sheet remain the main concern

This is where investors should keep their feet on the ground. Free cash outflow was £92.6 million, slightly worse than last year, and net debt excluding leases rose to £294.9 million. Cash and cash equivalents were £209.5 million at the period end.

Some of that pressure came from higher interest costs. Interest paid jumped to £29.7 million from £9.6 million, partly because there was no equivalent convertible bond coupon in H1 FY25.

After the period end, ASOS repaid the 2026 convertible bonds in full for £73.6 million in cash. The refinancing itself looks sensible enough: the group now has a £150.0 million senior term loan and an £87.5 million delayed draw term loan facility, which was undrawn at the period end, both maturing in November 2030.

The good news is that this gives more liquidity headroom and should reduce annual cash interest costs by around £5 million on a like-for-like basis. The less good news is that ASOS is still carrying a lot of debt for a business that remains loss-making at the EBIT level and reported total equity of only £85.2 million.

ASOS FY26 guidance confirmed: what management is signalling

Management kept full-year guidance unchanged, and that is important. It now expects:

• GMV to show an improving trajectory through the year, 3-4 percentage points ahead of revenue
• Gross margin improvement of at least 100bps to 48-50%
• Adjusted EBITDA of £150 million to £180 million
• Broadly neutral free cash flow

Holding guidance after a volatile half, which included about £7 million of IEEPA tariff costs in the US, is a decent sign of confidence. ASOS has also started the process to pursue refund claims related to those tariffs, but any outcome and timing are not disclosed.

There are still risks. US tariffs hurt profitability, the Middle East conflict is creating supply chain inflation and disruption, and demand recovery is not yet fully proven. But current trading being described as in line with expectations, with Q3 GMV trends improving again, is clearly better than the market would have feared a year ago.

My view on the ASOS interim results for retail investors

I think this is a credible and mostly positive update. The headline sales declines are still ugly, but underneath them ASOS is building a more profitable retail model. Better gross margin, lower returns, leaner warehousing and improving new customer numbers are exactly the ingredients you want in a turnaround.

The bear case has not disappeared. Debt is still heavy, cash generation still needs to improve, and management has more to prove on getting back to sustainable growth. But the bull case is now easier to make because this no longer looks like a business stuck in a spiral of falling sales and collapsing economics.

My read is that ASOS is moving from rescue mode into rebuild mode. That does not make it low risk, but it does make these H1 FY26 results matter.