Margin gains lift Asos to £24.4m pre-tax profit

A profit built on margin, not on sales

Group revenue fell 9% to £2.25bn. Gross merchandise value declined 5% to £2.35bn in the 52 weeks to 30 August. For investors, the profit is real but the sales line is not. Earnings now lean on a 50.5% gross margin and a much smaller debt pile rather than on more customers spending more. For shoppers, the same strategy means less discounting and more full-price stock, which is what lifted the margin in the first place. Asos has not said how much of the fourth-quarter momentum carries into the current year, and the October cyber attack has muddied the early read.

The fourth quarter broke that pattern. GMV rose 4%, the first quarterly increase since 2022.

The statutory profit also leaned on one-off gains. Asos booked the £24.4m pre-tax profit helped by the disposal of its Atlanta and Lichfield fulfilment centres. Strip those out. The adjusted pre-tax loss was £46.4m, down from £98.2m. That was better than the £61m analysts had forecast. Retail Gazette put the adjusted EBITDA increase at 29%. The Westmorland Gazette reported a 39% jump.

A pre-close update came on 27 October. It told the market to expect adjusted EBITDA above the midpoint of guidance.

Where the money came from

Adjusted gross margin rose 340 basis points to 50.5%, above the company's medium-term target. Net debt fell more than 40% to £109.3m after the two fulfilment centre sales. Hargreaves Lansdown had expected a fall of about £75m to roughly £110m. Cost cuts did the rest. Asos said savings came from lower headcount, tighter control of indirect spend and ongoing efficiency work. The commission-based Flexible Fulfilment model lets brands keep their own stock while Asos takes a fee, cutting inventory risk and markdown pain.

The direction was already clear at the half year. For the 26 weeks to 1 March 2026, adjusted gross margin was 48.5%, up 330 basis points and the eighth consecutive quarter of improvement.

The October cyber attack and its bill

The incident on 6 October let an unauthorised party into some basic customer data. The unauthorised party did not access payment information or account passwords. Asos estimated the attack knocked 2% to 4% off group GMV in October. With about £200m of GMV in a typical month, that implies £4m to £8m. Chief executive José Antonio Ramos told reporters the effect would fade. "We're confident that this [impact] is going to dilute over time. So I don't think that it is such a big thing, to be honest," he said. The active customer base still rose about 1% to 16.5 million by the end of October.

Investors had already marked the stock down once. Shares fell 12% last month after a previously unknown group claimed it had hacked the company. Asos said its website and app remained operational throughout.

Asos said it paused some marketing and customer relationship management work. It returned to planned activity within two days.

The first half set the pattern

The half year showed the same split between profit and volume. Adjusted EBITDA rose 51% to £64m for the 26 weeks to 1 March 2026. Revenue fell 14% to £1.11bn and GMV fell 9%. Modaes put the GMV decline at 8.3%. Operating loss narrowed to £100.9m from £210m. New customers in the UK grew about 10% year on year. Churn fell 150 basis points. Asos recognised £7m in US tariffs during the half. It has since asked for the money back, after a High Court ruling that the duties were illegal. At that point it stuck with full-year adjusted EBITDA guidance of £150m to £180m.

What happens next

Asos guided adjusted EBITDA of £180m to £200m for the year to August 2027. That is above a company-compiled market consensus of £177m.

It expects low-single-digit GMV growth and positive free cash flow. That would reverse the 5% decline just reported. JPMorgan analyst Georgina Johanan called it "an encouraging start to the year" given the challenging clothing market in September. Shares in the FTSE 250 retailer rose over 4% in early trading on 5 November. They are up more than 50% so far this year.