ASOS Plc (ASC) Earnings Call Transcript & Summary

Good day, and welcome to the ASOS full year financial results analyst presentation and question-and-answer conference call. At this time, I would like to turn the conference over to Adam Crozier, Chairman of the Board. Please go ahead, sir.

Thank you very much. Good morning, everyone, and thank you for making the time to join this call at short notice this morning. Really appreciate you doing that. I'm here today with Ian Dyson, and Mat Dunn and Katy Mecklenburgh. Today, there's quite a lot of ground to cover. So we’ve set aside up to 90 minutes to cover the questions -- to cover the presentation rather and the question-and-answer session. Before I hand over to Mat, I thought it was worth -- who's going to take you through the results and strategy. I wanted to first just start by addressing some of the changes in leadership that we've announced today. Nick and the Board, as you've seen, have agreed that now is the right time for him to step down as CEO. Nick, as you know, has played a fairly pivotal role in the development of ASOS over the last 12 years and leaves the business with a strong brand, some great people and solid foundations to build on. We've also announced today that Matt will take on the new role of Chief Operating Officer and lead the business until a successor for Nick is recruited. Katy, who's currently Director of Group Finance, will become Interim CFO. As you know and previously announced, I'll be leaving the Board on the 28th of November, and I'm delighted that Ian Dyson has agreed to chair ASOS for the next 3 years. Ian is the right candidate to oversee the next phase of growth and to lead the search for a new Chief Executive Officer. Also, delighted to say that Jorgen Lindemann will be joining as a Non-Exec Director. Jorgen, who I know well, brings deep experience of leading digital-first businesses. He's currently the Chair of Minto, the Danish online fashion marketplace and until recently was a Non-Exec Director of Zalando. Over the last 3 years, ASOS has made significant progress, delivering 60% growth in revenues, improved profitability and a strengthened balance sheet. We bolstered the management team and improved ASOS' operational capabilities and resilience as we move from being a U.K. exporter of goods to the genuine global company. At the same time, however, we recognize there's more to do to accelerate the pace and intensity of commercial execution. And ASOS' management and Board have spent considerable time over the recent months developing and validating a clear strategic plan to accelerate international growth, build on ASOS' undoubted strength in the U.K. This will allow ASOS to deliver against the ambition to be one of the few truly global leaders in online fashion retail. And key to that is ensuring that we have the right leadership in place for the next phase and that the changes we're announcing today are designed to ensure we deliver against our clear strategic intent. With that, I'm going to hand over to Mat, but obviously, we'll be happy to take questions on the topics I've covered at the end of the presentation. Mat?

Thanks, Adam, and good morning, everybody. We've obviously announced a lot of news today. So let me start by giving you the highlights and outlining what we're going to cover. First, we closed P4 exactly in line with guidance, with strong performances from both the U.S. and U.K. For 2021, overall, we delivered strong growth in revenues and profit, whilst also making good progress in strengthening the business and the team. Looking to the current year. As we all know, our industry faces a number of short-term headwinds, particularly from freight and supply chain challenges. We have taken decisive action to mitigate these impacts, but we are not immune and we have reflected that in the guidance for FY '22we've provided today. Importantly, these headwinds are temporary, and we have made a very conscious decision not to let them distract us from continuing to invest to capture the huge potential in front of us. Our strong balance sheet underpins our ability to invest with confidence behind delivering on ASOS' long-term potential and our discipline gives us the flexibility to deliver robust financial performance even in more challenging times. We'll continue to drive the business hard to deliver efficiencies that will help fund investment. And the midpoint of our profit guidance today reflects that with profit broadly in line with FY '21 despite a material investment in marketing to support our international ambition. Finally, I'll give you a preview of our strategic plan, which we'll discuss in more detail at our Capital Markets Day that will now be held on the 10th of November. It's an important milestone for the business and comes on the back of a huge amount of work by the whole team over many months. ASOS has built strong foundations for growth. And over the last few years, we have embedded far greater resilience and discipline into the business. That said, we know there's room for improvement in terms of the speed and intensity of our execution. There's lots to do, but we have a great team and detailed plans in place to accelerate our performance, and I'm very confident in the targets we're setting out today, which are fully aligned with management's long-term incentives. Before I hand over to Katy, I might just touch on our progress in recent years. As you can see from this slide, since 2019, we've rebuilt momentum in sales, delivering a CAGR of 17% despite slower sales momentum in 2019. We've restored the structural profitability of the group with significant improvement in PBT, even when excluding the impacts of COVID. And following cash outflows in 2018 and 2019, we have materially strengthened the balance sheet through a combination of strong free cash flow generation and financing activities which has -- have enabled us to acquire the Topshop brands while still increasing our net cash position. This has all been driven by our focus on operational excellence, which has enabled us to reinvest in our customer offer, our experience and engagement, whilst improving our structural profitability. We will talk more about this in due course. But in the meantime, I'm now going to hand over to Katy to talk through the numbers in more detail.

Thanks, Mat, and good morning, everyone. I'll quickly cover our key financial metrics. We delivered revenue of GBP 3.9 billion, up 22% year-on-year. This reflects an exceptional performance in the U.K., which grew at 36%. Internationally, we were pleased with our progress in the U.S., which grew at 21%; and Europe, which grew at 15%. The U.S. growth was supported by the Topshop wholesale business, particularly in P4 as the wholesale business continues to gain momentum. Gross margin stepped back by 200 bps in the period driven by COVID-19-related freight costs, Brexit duty, product mix and adverse foreign exchange movements. My next slide deals with this in more detail. On an adjusted EBITDA basis, profitability increased by 20 bps to 8.8%, reflecting the strong cost discipline, which we talked about before. We've excluded from our adjusted metrics the one-off acquisition and integration costs of GBP 10.5 million and amortization of acquired intangible assets of GBP 6 million, which relate to acquisition of Topshop brands. A reminder that in adjusted EBITDA, we also exclude share-based payments, which in FY '21 totaled GBP 7.6 million. Moving down the P&L. Adjusted profit before tax increased by 36% to GBP 193.6 billion. Our FY '21 CapEx spend was GBP 157.1 million in line with our P3 guidance of circa GBP 160 million, reflecting a 35% increase on FY '20 driven by investments into TGR, the fit-out of our new Lichfield fulfillment center and automation of the Atlanta warehouse. And lastly, on this slide, we ended the period with a net cash balance of GBP 199.5 million, reflecting strong underlying cash generation despite the headwinds from longer lead times due to COVID related supply disruptions on stock build and the working capital unwind of GBP 88.7 million from the prior year. Taking a closer look at the gross margin. We saw a 200 bps decline in the period primarily reflecting the impact of increased freight and duty, product mix and adverse FX movements, which have been well flagged throughout the period. If I just walk you through the chart on this slide, you see that we saw an impact from the change in product mix as customers shift -- switched to lockdown categories including Face + Body, activewear and casual wear, where we see exceptional growth of 49%, 51% and 36%, respectively. Our product mix impact in H2 was roughly half of the H1 impact as we cycled the COVID impact in H2 and this demand for event-led products started to increase. Our freight costs remained elevated as a result of COVID related disruption to supply chains. We were also impacted by Brexit duties and delays as we've referenced throughout the year. These largely impacted H2 while we expect a full year impact in FY '22. Matt Rogers and Gary Beveridge talked in detail about the changes that we've seen in freight costs and how we're mitigating these at our supply chain capital markets event in mid-August. However, as an update, we continue to see significant volatility in both the air and ocean markets with reduced capacity and increased demand. We have factored extended lead times into our planning processes and secured additional airfreight capacity to protect key products ahead of peak. Long-term freight agreements remained in place, reducing the overall impact situation freight costs relative to market prices. The well-publicized HGV driver shortage continues to have a low impact to ASOS. We have seen an adverse FX impact primarily due to the changes we've seen in emerging currencies exchange rates, largely the Russian ruble. We only hedged the ruble at 6 months, and we've seen a 15% devaluation across the year, resulting in a net P&L impact of circa GBP 30 million. And finally, the other bucket shown on the graph reflects the impact of a step-up in promotional activity due to growth investments in key markets and competitive pressures in rest of world, along with price investment into Europe and the U.S. which we were able to fund through operational efficiencies, including better intake margins. Having talked through gross margin, I wanted to run through the remainder of the P&L, particularly distribution and warehouse costs. The COVID tailwind drove a reduction in distribution and warehousing costs as a percentage of sales with lower returns rates continuing to generate lower carrier and warehouse processing costs. The external cost environment remained challenging, and we continue to face higher surcharges when fulfilling rest of world territories and strong competition for warehouse labor in the U.K., leading to above inflationary wage increases to maintain staffing levels. Despite these challenges, our supply chain remained resilient throughout the year, and we continue to drive gains from automation and leverage our fixed cost base across each of our sites. Marketing costs increased by 140 bps as a percentage of sales as we invested in digital marketing channels to boost new customer acquisition, particularly over the peak period. We focused on customer engagement and also invested behind the launch and positioning of the Topshop brands, ensuring that we position these brands for continued global growth. Additionally, we continue to develop our engagement with customers through TikTok and Snapchat, which we know are increasingly popular channels with our 20-something customers. Mat will talk to you more about our approach to FY '22 marketing investment as we invest in multichannel marketing to grow awareness in key geographies, and we will further speak to this at our upcoming Capital Markets Day. In other costs, you can see the benefit of our nonstrategic cost program contributing circa GBP 30 million benefit in the year. Adjusted PBT, excluding COVID related returns benefits, improved by 20 bps on the prior year. And our adjusted PBT margin, excluding the COVID benefit is 3.2% for the year. Turning now to our results by region. As mentioned earlier, our U.K. performance this year has been exceptional. As we saw in the first half, the strength of our position in our home market, supported by an acceleration to online as a result of COVID has led to market share gains. We have delivered U.K. growth on a 2-year basis of 61%. And so we anticipate that whilst our market share will hold, the level of reported growth will slow as we lap incredibly strong comparators. The U.K. also led the way for customer growth with 20% growth in the active customer base. Within this, as lockdown restrictions lifted, we saw a significant step-up in our premier customer base with a growth of 18%. ABV increased 5% for the year overall, albeit with a step back in ASP as casual wear still retains a larger proportion of our product mix than prepandemic. In the U.S., we are pleased to see a continued acceleration of the growth rates as we have continued to invest in the U.S. market to improve awareness and ensure competitive pricing. Total sales growth of 21% was supported by the wholesale contribution from the Topshop brands, which launched in April 2021. This added an estimated 9 percentage points of growth in P4. As we've talked about before, our U.S. proposition over indexes by an average of 10% towards event-led product. And as a result of this, we have not benefited from COVID in the U.S. to the same extent as we have in our other markets. Encouragingly, we are, however, starting to see demand for event-led products start to normalize back to 2019 levels. Moving to the EU. We delivered sales growth of 15% in Europe in the period as we saw growth rates slow in P4 to 4%, impacted by more muted consumer demand and shipping and Brexit-related delays. As we have mentioned before, the impact of COVID has not been consistent across the region. For the year as a whole, we saw strong performance in Germany and France, while Southern Europe continued to prove challenging. We have, however, seen strong demand progresses in Germany, in particular, which we have not been in a position to fully capitalize on as our stock profile was impacted by the aforementioned industry-wide supply chain constraints. Finally, for me, rest of world recorded growth of 6% for the year. Compared to our other regions, rest of world continues to be disproportionately impacted by an extended delivery proposition. This is particularly evident in Australia, where our standard delivery proposition has been more than 30 days in recent weeks. This has led to a decline in market share in Australia as local competition continue to capitalize through increased promotional activity. Within Russia, market growth has been subdued. However, we have seen signs of improvement as we exit FY '21, supported by the rollout that ASOS Fulfils to Russia, with Russia now able to access the stock pools of both Eurohub and Barnsley. I'll now hand back to Mat, who will take you through an update on our strategic process over the last 6 to 12 months.

Thanks, Katy. So I know you've all seen this, which we set out just over a year ago. But it's important to reshow it because it forms the foundation of both what we've been doing this year and what we're committing in terms of future plans and targets. Over the next 7 slides, I'll run you through some of the highlights of last year and later, I'll talk about our future plans. We've also included more detail against other key actions during the year in the appendix for those who would like to spend some more time looking at that, and we will provide further detail on the future of each of these priorities at our upcoming Capital Markets Day. Our first priority is to become a truly global retailer. This provides a platform for truly localizing our [ offer ] outside of the U.K., which will enable us to accelerate our international growth. 2021 was an important year in this respect as we completed the rollout of TGR in the first half of the year. During the implementation, we trained over 1,600 ASOSs in 471 virtual classrooms and launched the changes across our operations in March 2021. The cut over to new systems and ways of working went exceptionally well with no material impact to our customers, suppliers or teams. TGR is a critical piece of infrastructure and gives us real benefits in pricing, ranging, stock management and visibility. It also provides the technology platform to open up further opportunities including a new product lifestyle management system to enable better buy decisions, improve margin and speed to market, and it's critical for the new functionality we've built to support new business models such as Partner Fulfils and wholesale. We have also completed the launch of our -- phase of our fourth fulfillment center in Lichfield, which is a critical investment to underpin our future revenue growth. This is performing better than anticipated in the ramp-up phase, and as a result, the center will add incremental capacity ahead of peak trading later this year. We are launching this as a manual facility initially with the first phase that can store up to 7 million units, and we will subsequently automate by the end of FY '23. There will obviously be an associated cost of investment, which is in the order of around GBP 25 million. This reflects initial start-up costs as well as the impacts from the manual nature of the facility. However, these will unwind over time, fully reversing once automation comes online towards the back end of FY '23. Our second priority is to grow our unique ASOS brands. These remain a critical part of the ASOS business and key to our future growth plans. The acquisition and integration of the Topshop brands has been a significant acceleration for our ambitions. First, let me update on the progress against the integration plans we outlined earlier in the year. And as you can see, we are well on track. We transitioned all stock to our warehouses, adding 5,000 SKUs initially with a longer-term plan to expand this to 19,000 SKUs by FY '24, similar with to that in -- that we have in ASOS Design. From a supply chain perspective, we've successfully onboarded all Topshop suppliers. Of these, we've identified 55 suppliers who will be exited in a responsible time frame with the final suppliers base expected to consist of around 80 suppliers, many of whom have not worked with ASOS before. We've also worked to establish relationships with all these suppliers and ensure that we have supply lines set up to receive stock. As we talked about a few weeks ago with the launch of our new FWI goals, we have a very rigorous approach to the supply chain and have already mapped all Tier 1 to 3 suppliers and all Tier 1 or 2 suppliers have undergone a third-party audit. We are currently working through these audits and are on track to publish a full listing of all Tier 1 to 3 suppliers by March 2022, as previously committed. I'm delighted to say that the performance of the Topshop brand has been very strong since the acquisition in February. Since our half year update, these brands have sustained triple-digit growth momentum against pre-acquisition Topshop brand sales on asos.com. We've seen outstanding growth in the U.S. in particular with growth of over 400% for FY '21, and the U.S. now accounts for around 16% of global Topshop sales. We continue to post strong growth rates in the U.K. and Germany, highlighting the strength and resonance of these brands in those markets. During the period, we launched our wholesale business dispatching our first Topshop wholesale orders in P3 of this year, a first for ASOS. And we have built momentum on the wholesale sales into P4. We have also trimmed down our wholesale partners with a focus on fewer, better and more digital. And we'll be partnering with Nordstrom, Zalando, Yoox, GFG and Namshi going forward. The acquisition has also unlocked another opportunity for ASOS, a newly minted strategic partnership with Nordstrom. You remember in June-July, we announced the formation of the strategic partnership with Nordstrom taking the minority stake in Topshop, Topman, Miss Selfridge and HIIT globally. This marked the start of a broader strategic partnership to grow our business and brands in the U.S. As part of this, we will be launching an ASOS Design, Collusion and AsYou on Nordstrom.com by the end of this calendar year with a full launch following in the first half of 2022. We would also roll out click and collect services across the wider Nordstrom estate. Our third priority is enhancing our flexible multi-brand platform, which will further facilitate localization and improve availability. The technology we have developed will broaden the range and nature of the brands we can work with. And in time, it will improve the relevance of our local assortments in key territories. Crucially for ASOS, we will still retain our curated edit based on the needs of our 20-something customer. This means brands and options will still be controlled by us. And as a result, our offer will still remain authentically ASOS. We've now rolled out the first phase of this known as ASOS Fulfils. This provided us with the capability to fulfill from anywhere as within our network. By way of an example, we were able to add 54 new brands for offer in the U.S. from Barnsley, which helped to strengthen our product offer and backfill size availability in that market. Through this, we were able to offer an improved stock profile while maintaining our strong customer experience. As of this month, we have subsequently rolled this out to the U.K., Russia, France, Italy and Australia. What this means is that customers shopping in France can now see stock available from both Eurohub and Barnsley, whereas before they would only be able to have seen stock from the Eurohub. With ASOS Fulfils now well underway, we are ready for the second phase of the flexible fulfillment program known as Partner Fulfilment. As we talked about at the half year, this will allow direct-to-consumer fulfillment augmenting ASOS' own supply chain with our suppliers' inventory to directly fulfill customer orders. As with ASOS Fulfils, this drives greater stock availability in product assortment [ rates versus our peer ]. In doing this, we believe we will deliver 2 key benefits. First, we will backfill our stock availability when we sell out by offering the same product from our partner network. And second, we will increase our overall brand and product assortment by offering a greater width and introducing smaller locally relevant brands, all of which will be curated by ASOS. We expect to begin our rollout at the end of the calendar year in the U.K. in partnership with a major sportswear retailer. We will start with a [ model way ] by our third-party brands backfill our stock, and we receive a commission on these sales. We believe this model represents a sizable long-term opportunity. And in the medium term, we will target 5% of GMV in the next 3 to 4 years. Turning to our fifth priority, developing our effective, efficient and sustainable model. For today, I want to show how we are focused on turning our relentless focus on operational excellence into a virtuous cycle whereby we are able to operate more efficiently in order to reinvest back into market-facing investment and drive further growth. Over the last 2 years, we have removed over GBP 80 million worth of nonstrategic costs from the business. This is [ the new team ] for our focus on sourcing optimization, supply chain efficiencies, customer contact reduction and procurement benefits. In addition, we've been able to drive through a saving of circa GBP 35 million through automation-related warehouse efficiency savings. This includes areas such as improved returns processing, product reprocessing and of course, automation. We've then taken these savings, allowing us to reinvest in marketing whilst investing both back into growth and improving our profitability. Turning now to the outlook. Clearly, the current environment remains highly uncertain, but we've tried to be as clear as possible in terms of our expectations for the current year. In the coming year, we will deploy our platform capability, accelerate both U.S. and EU growth trajectories and continue to deliver strong operational efficiencies to support profitability. However, it is clear that our performance in FY '22 will be constrained in the first half of the year as current pressures continue. And as a result, our FY '22 sales growth is expected to be in the range of 10% to 15% with H1 revenue growth in the mid-single digits, reflecting tougher comparables in the first half of the year, particularly in the U.K., where we will hurdle a 66% 2-year growth rate and the impact of well referenced global supply chain constraints. And expected an anticipated acceleration in the second half of the year driven by the continued resumption of event-led demand and easing of those supply constraints and marketing investment to support international growth. We expect adjusted PBT to be in the range of GBP 110 million to GBP 140 million, which is broadly in line with this year's PBT, excluding the COVID benefit. The COVID benefit is what you all know, it was driven by returns rates, and we anticipate those normalizing in FY '22. We expect our PBT to be further impacted by the costs associated with industry-wide supply chain pressures, which we expect to remain throughout the first half of FY '22. And upweighting in our investment in marketing, particularly in our international markets, with our overall marketing increasing as a percentage of sales to circa -- of circa 1%. These costs and investments will be partially offset by continuous improvements in operational excellence initiatives. We expect our CapEx investment to be around GBP 210 million, and we further expect free cash flow generation to be broadly neutral. Lastly, I'll take you through -- briefly take you through our medium-term target, which we'll obviously walk through in much more detail at our Capital Markets Day. And as Katy said out earlier, over the past 3 years, we've transformed the business with our investment in infrastructure and the customer offer, and we have strong foundations in place for global growth. We have a winning customer offer, combining our strong ASOS brand portfolio with a platform consisting of the most desirable curated third-party brands overlaid with a personalized, engaging and inspiring customer experience. We already have significant scale in our international markets. Our EU businesses sales of GBP 1.2 billion, and our U.S. businesses sales of GBP 0.5 billion this year. We've made great progress in terms of improving our operational grid in recent years. And I already talked to you through how we've removed over GBP 80 million of nonstrategic costs since FY '19. But from an infrastructure tech perspective, we have a well-established platform. TGR was rolled out and ASOS Fulfils and Partner Fulfils are underway, and we've recently opened our fourth FC and are already progressing plans for our fifth. And we have a strong executive team in place with a global mindset, international experience and a broad range of functional capability. Throughout the course of this year, you've had a chance to hear from many of them and you will have a further chance to meet them more soon. While we are laying plans out for the next phase of our growth, the core of our focus remains unchanged: our business will continue with an absolute focus on our core 20-something consumer. They represent a significant opportunity with a total addressable market of GBP 430 billion in the U.K., U.S., EU and core rest of world territories. And we are aiming to capture 2% of this overall opportunity to deliver annual revenues of GBP 7 billion in the next 3 to 4 years. To do so, we will be accelerating the pace of our international growth and delivering an EBIT margin of at least 4%, notwithstanding elevated investment into marketing. We further expect to do this with CapEx in the range of GBP 200 million to GBP 250 million. Critically, these targets are built into our long-term incentive plans, and our team plans and goals are aligned behind them. We already have a great customer offer, but we plan to improve this further by transforming our loved ASOS brands into truly iconic brands that are exclusive to ASOS, improving our speed to market and leveraging the strength of our design, buying and merchandising teams to incubate and create new brands. This will enable us to add at least GBP 1 billion worth to our annual own brand sales. We plan to expand our platform through the Partner Fulfilment program and partner services, and we believe that we can achieve 5% of GMV from the partner program over the next 3 to 4 years. We also intend to significantly expand our sportswear and Face + Body businesses. And lastly, we plan to further strengthen the customer experience through the next stage of personalization, tailored category experiences and the amplification of our premier offer. Our next priority is focused on accelerating growth in key international territories, which includes doubling the size of the combined U.S. and Europe business. We have in recent years built an infrastructure that has created the global platform with warehouses in the U.S. and Europe and TGR creating full trading flexibility, and it is now time to leverage these assets. We will do this by offering a more localized assortment, particularly through Partner Fulfils, further localizing the customer experience so that ASOS shows up to consumers as that of a U.K.-centric brand and more as one that resonates for them locally. This will be driven by experienced, dedicated local trading teams who will drive the evolution of pricing information, consumer comms, the user experience and other elements of the proposition. And we will support all of this by investing across a broader range of media channels to drive greater awareness of the ASOS proposition. Core to the delivery of the strategy will remain a focus on efficiency and effectiveness, and we will roll out the next phase of our operational excellence program across the business to drive further efficiency and scale benefits, which will be invested back into growth initiatives to ensure a continuing cycle of reinvestment in the coming years. I've obviously only given you a high-level overview about medium-term plans, but the team have spent many months working on it, and we'll be excited to share it with you in a few weeks. So let me just briefly summarize our growth plan. There is a huge market to go after, and we think we are in a very strong position to do so, having laid the foundations to take share. We will deliver GBP 7 billion in annual revenues, return to at least a 4% EBIT margin and invest GBP 200 million to GBP 250 million of annual CapEx over the next 3 to 4 years. We will do this by doubling down on our own brand business, adding GBP 1 billion of additional sales, accelerate growth internationally, doubling the size of U.S. and Europe as a combined business and rolling out Partner Fulfilment with the first brands on board this year and delivering circa 5% of GMV in the next 3 to 4 years. And we'll do all of this while driving operational excellence to fund our growth. Honestly, I've shared this at a high level, and we will be able to put significantly more flesh on the bones of how we're going to deliver these plans as well as providing some additional disclosure to help you as investors understand the quality of the foundations we've already built. I know the team are looking forward to this opportunity to get you -- to know you all better too. I appreciate we've covered an awful lot today, so let me briefly summarize before we turn over to Q&A. We've delivered strong financial results in FY '21 and made good operational progress. At the same time, however, we recognize that there's more to do to accelerate the pace and intensity of commercial execution. We are confident in the scale of the opportunity ahead of us, but there are well-publicized short-term headwinds, and these are impacting us. But we remain confident in the strength of our business, and we'll continue to invest to capture the long-term growth opportunity, and we have a clear plan and have set medium-term targets which reflect this, plans that are committed into our long-term incentives. I appreciate we've covered a lot. So thank you for your patience. We would now be very happy to take any questions you may have.

[Operator Instructions] We will now take our first question from Charlie Muir-Sands from BNP Paribas.

Got the traditional 3. I'll give them one at a time, if that's okay. The first one relates to your FY '22 guidance. You said that you're sort of anticipating the challenges you faced in recent months lasting through the first half. So does that mean that you're expecting that by the time you get to H2, things are trending back towards normal or are entirely back towards normal with all those kind of cost pressures gone already?

So Charlie, so I think we're expecting them to improve. I’m not -- we're not necessarily planning them for -- to all have completely gone away. But typically, there's a peak on global supply chain capacity that occurs in the run-up to Christmas and into the early part of January and up to Chinese New Year. So we naturally expect with the cycle for that to get better in the second half. But we certainly haven't anticipated that all of those pressures have completely gone in the second half. The other thing we're expecting to ease in the second half is as we move into the second half, our current anticipation would be that event-led demand would pick up. Clearly, as we previously referenced in FY '21, we saw significant impact on consumers' lives in terms of holidays, festivals, events and stuff like that, that were not a feature of last summer. We would anticipate that they are a much bigger feature of the upcoming summer and, therefore, we'd expect that demand profile to improve in the second half as well.

Got it. And I appreciate the specific guidance around the shape of your revenue expectations for the year ahead, H1 compared with H2. But I just wondered if you could give us any color further on what you've experienced so far at the start of the autumn/winter season. I think some -- with that mixed messages, some retailer are seeing now seeing a bit of an acceleration in trend and others the opposite.

Yes. I mean I guess given we've given such detailed guidance for H1, the only thing I can usefully add is that our current trading is broadly in line with the expectation we've got for the first half of the year. But it's very early in the season, hence why I hardly cautious of saying too much more.

Understood. And my final question. I just want to make sure I understood correctly. You referred to trials for, I think, your supply fulfillment in U.K. Did you say with a major sportswear retailer? Because I think previously, you talked about perhaps you were going to be doing something with sportswear brands in the U.S. So I guess this is a different project. But I just wondered if you clarify exactly what is...

Our sportswear brands are also retail the right products. So the focus is to trial in the U.K., but it is with a major global sportswear brand and retail, if that makes sense.

Okay. So it is a brand owner, not just a pure reseller...

Yes, absolutely. But they've also -- obviously, it's D2C will retail their own product. So maybe -- sorry for the clarity of the language.

No, that's very helpful.

We will now take our next question from Michael Benedict from Berenberg.

Just a couple both on margins from me, please. Firstly, I was given an indication of the marketing ratio you're thinking about within the medium-term guidance of 3 to 4 years out. And then secondly, I appreciate it's early days, and you may well be trying to give more at the CMD. But is there any sense of the margin impact of that 5 percentage points of partner -- sorry, partner platform shift?

So Mike, the risk of not answering either of your questions, we'll obviously be able to provide more detail on both of those at the CMD. I guess what I can say a very high level is that we do plan to continue to increase our investment. But as I said, let me come back to more detail at the CMD in terms of exactly where that might reach. And again, without -- I won't go into detail from -- other than to say that from a pure P&L margin perspective, we would expect the Partner Fulfils business to be accretive to margin overall.

We will now take our next question from Simon Bowler from Numis.

Can I have a shot with 3, if that would be okay? Quite quick. First one, there was a few helpful numbers you gave out on Topshop. Can you confirm, is Topshop still on track for your kind of initial guidance for fiscal '22 that you set at the time of acquisition? Second one being, can you just give any kind of broad sense of the split of the GBP 210 million CapEx for fiscal '22? Is that same sort of split? How we should be thinking about medium-term CapEx commentary? And then the last one, I think, with the penultimate slide, where there was that kind of flywheel. And the last part of that flywheel was investing into marketing, which sounds like something you're going to be doing stepping up kind of straight away. How much further do you think there is to go in terms of localizing the offers? And over what sort of time frame should we be seeing that come through? That might be a CMD question, I acknowledge.

Yes. I think probably the last one is a CMD question. I guess the only thing I would say is inherently doubling -- our plan to double the U.S. and European business. The answer is just quite a lot further to go in terms of the opportunity outside of the U.K., but we can put some more detail on that in due course. So in terms of Topshop, I think we're still really comfortable with our long-term aspiration. As with the rest of our portfolio, we would expect the Topshop brands to be somewhat impacted in the first half of '22. Exactly where that will fit in terms of the guidance we gave, I guess we'll have to wait and see. But I don't think anything that we're seeing would at all detract from the investment tax that we've had at the time of the acquisition of those brands. In terms of the CapEx the GBP 210 million, there will be an uplift in underlying technology investment within that GBP 210 million, and that will reflect particularly investment in both the customer experience and the data and AI capability will be where that increased investment would go. And then obviously, you'll continue to have investment going into the automation projects in Lichfield and in the U.S. So those are the big kind of chunks of it, which -- and in terms of what to expect going forward on that, Simon, you should continue to expect us to increase our investment in technology, in line, I guess, with our anticipated sales growth. And then on top of that, obviously, we will continue with the infrastructure projects required to keep the level of capacity. So as the automation projects roll off, our anticipation is that we would start investment in the fifth FC, albeit that that is not yet committed, but it's very much part of our thinking in how we scale to the GBP 7 billion.

We will now take our next question from Simon Irwin from Credit Suisse.

I've got 3 questions as well. I'll give them out separately. I mean the first, I guess, is the U.S. We've obviously heard bullish stories about the U.S. in the past, which haven't been necessarily met by the performance on the ground. Can you just give us a flavor of kind of what's not worked in the U.S. historically, given that particularly this year, where it has been an incredibly strong year for retail sales generally. And except you've had a better 4Q, but it's not been a standout year for you. I'll leave that one now and come back with the rest.

Okay. I'm not trying to say that the U.S. hasn't worked, Simon. We have had to build a number of foundations, which we've built over the last few years. So clearly, we needed to build that local capability to do next-day delivery and really replicate the core of the ASOS proposition. That's taken us some time to do. And as you know, ramping up the associated stock profile has also taken some time. And then we did need the TGR capability to give us more trading flexibility, more pricing flexibility than we previously had. So those things are now in place, which is why we now feel confident to start to invest more firmly behind that U.S. growth. So I think from our point of view, now is the right time to leverage the assets. I think if we try to leverage them before, we would have effectively been operating with -- without the full offer available. So it feels like this is a kind of pivotal time for us to kind of pivot and start to shift that focus.

Okay. Given there's a lot of moving parts, can you just give us a sense of what your assumptions are for [ bolt-in ] costs for the ASOS brand for the year ahead in terms of the moving parts such as particularly raw materials kind of freight and FX?

Yes. So again, they're all-encompassing in the guidance, so I won't try and unpick all of the moving parts. Suffice to say that there were inflationary pressures on all of those elements. But by far, the biggest pressure would be on freight. But FX, again, as you know, we hedge out quite far. So the FX is that there is an impact, but it's relatively muted. So within the 3 that you called out, there's inflation or cost pressure on all of them, but it's freight that's the big one.

Great. And in terms of your long-term ambition, particularly around own brand, would you expect to make further M&A?

I think expect is probably a strong word when it comes to M&A. Clearly, we have -- having got the flexibility of balance sheet and strength of balance sheet we've got, we have that strategic optionality. And if there are things that meet our criteria, we will continue to look at them. But I think -- as I think I've said before, my anticipation is that we'll do -- we'll look at lots of things and not do very many.

We will now take our next question from Georgina Johanan from JPMorgan.

Two from me, please. The first one was just around the planned marketing spend and really how you got comfortable with the 100 basis points step up with the right ratio, just given that that will obviously leave you still somewhat below peers. And I guess the kind of combined question with that would be how has the decision been made that marketing is the right decision to invest rather than, say, further price investments. And that's my first one, please. And then my second one was just around the sort of the year -- this current year, how we should be thinking about stock shortages and stock delays and how that plays into your current guidance? Because I noticed that your gross margin guidance for the year is actually flat. And I would have perhaps expected some incremental mark down activity to be wrapped into that just given that there might be some delays and so on. So if you could just help us understand that that would be really helpful, please.

Yes. Let me just maybe deal with the gross margin one. So in terms of gross margin, obviously, as the product mix shifts, that's generally beneficial for gross margin. So that's what's, in effect, offsetting some of the other things that you have referred to. So we are expecting, I guess, markdown to continue to be elevated. But we've had a fair degree of markdown in the last year given the volatility. So the year-on-year impact is perhaps not as big as you might have expected. Clearly, we hope in time that that will become an opportunity if we see a more normalized trading environment. But probably product mix is the fact that you didn't mention, George. From a marketing perspective, I think it's probably worth a few moments just on talking about how we're approaching the marketing in general. So we are approaching it in a very data-driven way. And we are in the process of testing the marketing, and we will continue to invest behind it as we see it working. So I guess the 1% is our current view of where we think that efficient frontier is. And as we scale our awareness, we would hope that potentially we would lift that even further. But obviously, we're going to continue to do that in the same disciplined way that we have with both our current performance marketing and other areas of our business. So to some extent, I guess, it's a view of where we think it will be, but we'll obviously continue to evolve that through the year. In terms of why investment in marketing rather than pricing or other areas. So obviously, we invested last year in making sure that our pricing architecture was where we wanted to be relative to competition. So we now feel that we're in the right place. With all of the infrastructure and capability that we feel, we now feel that it is the right time to accelerate awareness amongst consumers and particularly internationally to create awareness of that, not just in the shopping moment, which is traditionally where we've invested our marketing, but in a much broader range of channels. So I guess it's because now is the time that we're ready to do that and because all of the other elements of the proposition are where we'd like them to be that we've got the confidence to do that. But as I’ve said, we will do it in a very deliberate and data-driven way to ensure that we're getting a return on that investment as we deploy it.

That's really helpful. And perhaps just a follow-on, if I may, just around the sort of stock delays and shortages. I appreciate you've given guidance for lower sales growth in H1, but how much is captured in that for any delays and so on and so forth over peak?

So again, without wanting to go into all of the detail, there are, I guess, 3 factors driving that guidance in H1. The anticipation with extended supply lines and pressure on our -- some of our branded partners that we will see lower availability than we would ideally target, and that is a big chunk of the guidance. But we're also -- we're anticipating trading against a particularly tough U.K. comparable, and we would have traditionally -- even notwithstanding the stock shortage, we will -- therefore, we expected our H1 growth to be weaker than our H2 growth in that case. And obviously, consumer demand, we'd expect to pick up through the course of the year. So there's those 3 factors. But within that stock shortage -- stock supply chain challenges being relatively large.

We will now take our next question from Anne Critchlow from Societe Generale.

I've got 2. The first question is about Partner Fulfilment. I'm just wondering why you might only reach 5% of GMV over 3 to 4 years. When Zalando got there in about a year, I think, and then reached 15% after 3 years. And I'm just wondering if it's whether it's because your own label is more important to -- at ASOS and you don't wish to detract from own label.

So again, let -- I'm not sure I recognize the Zalando numbers that you referred to. But 5%, we're obviously only starting to test it this year. And then we'll have to roll it out with a number of brands. And those brands will, in some cases, have work to do in order to be able to integrate into what we're doing. So it's not -- you can't instantly turn a brand on. It will take time. So we planned a methodical rollout to make sure that we can continue to make -- to ensure that we deliver the right experience. So I think it's a -- from our point of view, it feels like a good place to pitch it, but obviously, we'll be going as fast as it make sense for us to do. So the target is a view, but it won't constrain us one way or the other.

Okay. Great. And then the second question is on price. Is price more or less where you want it to be now in every region? Or do you have further work to do there?

So I think if I was going to summarize it at a high level, yes, price is probably where we would like it to be in every territory. Clearly, the pricing environment at the moment is relatively dynamic. And therefore, we will need to continue to be flexible and respond to how we see pricing evolve in the market. But certainly, we needed to do a reset of our architecture which we did last year.

We will now take our next question from John Stevenson from Peel Hunt.

Just to ask you on pricing, I can start there. I don't know what you're seeing in terms of inflation coming through from third parties as you come into next year and also what your thoughts are in terms of own brand inflation to sort of help soften the mix in terms of the tailwind you're facing or headwinds you're facing? Second question, just on brand awareness in the U.S. I think you talked about what's been happening in terms of U.S. brand awareness. And then on the marketing spend, you sort of experienced sort of brand versus performance marketing and how you're thinking about the additional investment going forward, especially in terms of driving awareness in stake? And finally, maybe you could both give a sense of how successful Topshop has been at bringing new customers onto the platform as well?

Yes. Right. Let me try and break this down, right. So in terms of the pricing environment, we are definitely seeing signs of price increases coming through on our RPs from some of our branded suppliers. And I'm sure you [ used in the broader market ]. So we're definitely seeing that. My anticipation would be that we will see more of that going forward as the inflationary pressures feed through people's intake. So I think my honest expectation is there's more to come. And I think where that leaves from an ASOS Design perspective is clearly, we want to make sure that ASOS Design stays in its right relative positioning. And therefore, we will continue to obviously look at that. And if we feel that we are out of line with the market, then we will clearly take the opportunity to move our pricing in line with the market. But it's obviously very dynamic at the moment. And also different market by market. But in general, I guess, my overall expectation is that we will see inflationary pressure. In apparel, we already are in some geographies. I see no reason why that wouldn't be the case and very much in line with the broader consumer inflationary dynamics. So from a brand awareness perspective, I think if I -- there are lots of different ways of looking at brand awareness, but probably if I just try and give one statistic to give you a sense of the opportunity. So from an unprompted awareness, which is a good measure of whether a consumer thinks of ASOS without you having to tell them about it, it's probably somewhere in the low double-digit percent of total relevant consumers that know us in the U.S. as an example. And therefore, the opportunity to -- and that would be 5x lower than the equivalent number in the U.K. if not more than that. Therefore, the opportunity to create brand awareness remains substantial in most international territories and it would be in different places in different territories, but the U.S. is a fairly indicative view. So -- which I guess leads to your next question, John, just about our experience of brand versus performance. So traditionally, we focus very much on performance marketing, in shopping in the moment, and that has obviously a very direct and immediate return because [indiscernible] someone buys or they don't. In terms of our experience with brand marketing, it also has -- it also generates incrementality. Of course, it does. But it tends to be over a longer time frame, and it's less -- you have to measure it in a slightly less immediate manner. So my expectation is that the -- and one of the reasons we've spoken to the 1% of sales being an investment is that we do expect to pay back, but it won't be as immediate as we've seen on performance marketing because we will have to build that emotional connection with consumers over time, which will ultimately drive them to asos.com. Now we're doing that in -- as I mentioned in response to George's question, we're doing that in a very data-driven way. And we will be able to see the impact on our business. But it will be something we'd have to monitor in the months rather than in the weeks. And then your question -- I think your last question was about Topshop and its incrementality for new customers. So we’ve had -- I mean kind of 2 phases to that, I guess. The first phase is we have seen a significant number of consumers who migrate over, who were on -- who shopped on the Topshop web platforms, come on to the asos.com platforms. But definitely, in terms of searches and new customer acquisition, Topshop indexes strongly within reasons that people come across to ASOS. That is particularly true in the U.S., where its [ late ] brand awareness is relatively high relative to that of ASOS.

We will now take our next question from Sherri Malek from RBC Capital.

I have 2 questions, please. Firstly, as well as the gross margin, I see that you're also guiding to have a distribution cost ratio to be flat compared to this year despite the short-term headwinds that you've highlighted. Could you talk a little bit more about the operational excellence initiatives and the supply chain initiatives as well that you've highlighted there? And then the second question, just curious to know how much are you baking into your guidance for a pickup in event-led demand in H1 relative to the other factors that you've identified and also relative to H2?

So just on distribution costs, Sherri, before I talk about OpEx, operational excellence. So from a distribution cost perspective, the big driver of that has been outbound freight, which was already elevated because most of it goes on passenger aircraft. So the fact that that's flat year-over-year is not necessarily driven by lots and lots of efficiency opportunities. It's because that cost has already elevated in the current year. It's inbound freight where we started to see significant increases as opposed to outbound freight, which happened on day 1 of the pandemic when passenger traffic significantly reduced. In terms of, however, supply chain operational excellence, there are opportunities to improve our distribution efficiencies and warehousing efficiencies and they're built into the guidance. They typically fall into 2 areas, a very high level. From a warehouse perspective, it tends to be around process efficiency. And so even in somewhere like Barnsley, we still target 5% to 10% efficiency coming out of just core process improvement, either through small CapEx investments or sometimes just through changes in working practices or the ways we do things. From a distribution standpoint, we look at the overall -- the range of lanes providers. I won't go into lots of detail because they tend to be quite commercially sensitive conversations, but there are, of course, opportunities to improve our distribution efficiency across different legs, and the team do cycle through effectively a rolling RFP process with our distribution providers on a geography by geography basis. In terms of event-led demand, so we are -- I mean it's a hard thing to characterize, but clearly, H1 this year, we're expecting more event-led demand this H1 than we saw in H1 of last year. However, as I referenced, we're also expecting a great -- from a supply side standpoint, we traded through a period where, particularly in the U.K., all of the shops were shut. So both of those kind of counterbalancing factors are factored into our H1 guidance. In terms of H2, clearly, the vast majority of retail was opened in H2 in the last year. And therefore, we would expect that event-led demand to both have a bigger impact. But also than H1 -- but also, we are expecting it to pick up quite materially in the area of things like holidays, festivals and events. So I would say, therefore, that's why we're expecting a stronger impact from event-led demand in H2 than we are in H1.

We will now take our next question from Caroline Gulliver from Stifel.

My 2 questions are probably for Ian and the Board, I'd like to just put them out there anyway. My first question is, can you tell us anything about what skills you're looking for in a new CEO as you start that search process? In particular, anything different or anything additional to the current skill support...

Caroline, we're struggling to hear you. Can you try and speak...

Can you hear me now? Can you hear me better?

Yes. Go on. Yes, that's much, much better. Thanks. Sorry.

I was just saying, I apologize because my questions are probably more for Ian and the Board, but nevertheless, I'd quite like to just put them out there. The first question is, is there anything you can share about what skills you're looking for in a new CEO? In particular, anything in additional or incremental to the current Board skill set or different from before? And my second question is, you put out some sustainability ambitions quite recently. And I just wanted a confirmation that all that was sort of still a commitment even though you sort of changed strategy a bit today in terms of CapEx and marketing and so forth.

Well, Caroline, I mean, I think, happy for Ian and Adam to comment on it as well. But I was intimately involved with putting together the sustainability targets. And I absolutely believe they're as relevant today as they were yesterday. So you've got an absolute commitment. And to be honest, a hugely passionate internal team about those. So they're very much part of our plans going forward. So you'll see no change in that area whatsoever. I'll hand it over to Ian and Adam on the first question.

Yes, on the CEO, I think it's pretty much what you'd expect. It's a global leader, very focused on growth, innovation, disruptive businesses, digital focus. I think very much what you'd expect us to be looking for in a new CEO.

We will now take our next question from Adam Cochrane.

Just one question from me. We talked a lot about temporary factors both negative and positive. The question I'm thinking at the back of my mind is, what is really needed to get this business to do a sustainable margin of above 4%?

So I think, Adam, maybe that is a question that we'll be able to come back to in more detail at the Capital Markets Day. So we'll talk more about both the long-term margin. We will give you some specific disclosure on the U.K. margin and how that compares to our international business, which I think, hopefully, will give some more color to your question. I guess, remember, at the end of the day, we are a business that's focused on driving growth. And so whilst there are definitely significant incremental margin opportunities that we have taken and will continue to take, our intention is to keep investing in those to sustain growth over the mid and long term. So that's effectively how we put the plan together, that's how we've focused on that 4% being a good balance of investment and profitability. But let's come back to the long-term margin opportunity at the CMD, if we may rather than we try to cover it now.

So would you think about the increased investments that you're putting in over the next couple of years, more in reference to the sales growth that was slowing as we went into the pandemic? Obviously, then we saw the massive increase. Are these trying to make some investments to make sure you don't slow back down to that rate of, let's say, 10%, 12%, 13% that you are running into prepandemic and that you want to accelerate it back to the 15% to 20% rate?

I think -- I'm not sure it's helpful to compare -- I mean, actually, the 6 months before the pandemic, we were growing at 20%. So I guess it's not necessarily driven by historical context. What it's driven by is an expectation that for us to maximize the opportunity in front of us, we need to grow and scale our international business. In order to grow and scale our international business, we need to invest particularly to engage consumers and to engage them in the proposition that we have to offer. So I guess it's founded on that desire to accelerate the growth rate of our international business that's driving it. I guess inherent in the way that we built the guidance and as we said for a number of years, our expectation is at some point that the U.K. growth will slow. But I -- and I feel like I would have said this before to you and to other people on the call, we've -- I've been saying that for the 3 years I've been here, and I suspect that the team have been saying it for very many years before that. So that has to happen at some point, but we're clearly going to try and maximize that opportunity whilst it's there as well. But inherent in sustaining long-term 15% to 20% growth rate, we need to accelerate our international growth, and that's the focus of the team.

We will now take our next question from Olivia Townsend from UBS.

My first one is just on price investment in Europe that you mentioned sort of earlier in the year. I think you said particularly in Germany and France on the ASOS Design some of the ASOS Design ranges. So I'm just wondering, is this complete? And would you be looking to invest more next year despite some of the headwinds? My second question is just on the U.S. Wondering if you could put any numbers around the contribution to growth that you're expecting from the Nordstrom partnership with the ASOS brand? And finally, just a point of clarification on markdown. So some retailers recently seem to be reporting much lower markdown and promotion in the market given lower supply. And I just wanted to clarify, are you saying that you haven't seen this? Or were your comments more about the rest of world, specifically Australia?

Okay. So let me start. So in terms of price investment, we have realigned our price architecture. There will be an annualization effect that rolls into H1 of next year because, as you know, we did that in H2. So we're kind of -- we've done it, but it will roll through for the next 6 months or so. From a U.S. perspective, we're clearly very excited about the Nordstrom opportunity. You've seen it contributed 9 points to growth in P4. But it will come back to more detail about how we see that partnership in time, and it's still early days. So it would probably be wrong for me to try and give you a go-forward number at this point. So in terms of markdown, yes, I'm not sure that you -- and certainly all of the data we're looking at would not suggest that there's been a dropping out of promotional investment in the market. I actually think that with the summer performance where it was across the whole industry as a whole, we've actually seen elevated markdown going into the autumn/winter period. And that's my expectation of what you're likely to see because of the volatility of demand, you're likely to see pockets of people's stock that needs to be cleared, et cetera. So I'm not sure that you should expect to see a more benign promotional or markdown environment. And certainly, all the evidence suggests the opposite at the moment. I think we've only got time for one more question. I think we've only got one more question, but we've only got time for one as well.

We will now take our last question from Tony Shiret from Panmure Gordon.

Unfortunately, it's 3 questions. But first one, no one's really talked about competition in the U.K. in particular. I wonder if you could comment about Shein and your general views and whether they’ve had any effect on you in any particular part of the market. Second question, again on the U.K., I just wonder within the overall sort of marketing guidance whether you're going to be increasing the proportion of [ SEM ] within the U.K. and whether sort of longer term presumably increase in sort of direct visits or sort of reduced proportion of paid for marketing in the U.K. sort of stopped. And the last question is really about the spread of your business. And I just wonder whether the new management -- I know you haven't got the new management yet, but whether the sort of remit of the Board might include looking at everywhere that you're currently present and trying to work out whether it's worth being present in those countries. So that's 3 questions.

Okay. Let me start. I'll take it in order then. So I mean, in terms of competition in the U.K. -- and again, it's a topic, happy to come back to in more detail than we can do justice to here. But I guess my view is that the U.K. has been a competitively -- and probably the most competitively intense market for a long period of time. Clearly, within that, Shein, a strong competitor and one that we look at and respect. In terms of you've seen the strength of our U.K. performance. I think it's hard for me to stand here and say anything other than at this point, they haven't significantly impacted our U.K. franchise. We've just delivered in excess of 60% growth over 2 years in our most established markets. So I think it would be wrong for me to say that competition is having a significant impact. That doesn't mean that we focus on competition and look to see and understand what people are doing, and we very actively do so. From an [ SCO struck PN ] balance in the U.K., so we -- as I said, I think earlier in response to other questions, we use performance marketing where it generates a return. Clearly, there is incrementality to be had in the U.K. from that, and we do that where it makes financial sense to do so. But it's also true to say that our investment in PM as a percent of sales is lower in the U.K. than it is outside of the U.K., reflecting our, I guess, higher awareness and, therefore, higher direct visits. But I don't think you'd ever see a wheel turning where we weren’t doing that because there is incrementality to be had in that shopping moment. And then again, I can give you my perspective on the geographical spread. I think we, as a management team, and then in conjunction with the Board over the last few months, we've looked at where we want to focus our efforts. And you can see in what we've referenced today that from an international perspective, our focus is particularly in the U.S. and Europe. So that will be where the focus is. However, our rest of world business remains a profitable part of our business and the business that the cost to serve relative to its incrementality at this point certainly remains high. And therefore, from my perspective, it remains in addition. That doesn't mean we won't look at strategic opportunities for it the same way we do with everything else. But I wouldn't necessarily anticipate to see a sea change quickly in that area, but I'm sure it's something that we will come back to as a Board and that we will discuss as we would do already. So appreciate -- thank you very much for your time. I think we've kept you for -- I suspect what's a record hour and 20 minutes for ASOS. Again, I realize that the team will be available throughout the course of the day. If there are questions we haven't answered or other questions that other people haven't get through the fullness of the time. So as ever, please do make contact if there's things you'd like to follow up on. But thanks for listening to us, and we will talk to you all soon.