ASOS Plc (ASC) Earnings Call Transcript & Summary

Good morning, and thank you all for joining. I would like to welcome you all to the ASOS trading update call. My name is [ Brika ], and I will be your moderator for today's call. [Operator Instructions] And I would now like to turn the conference to your host, Jose to begin. So Jose, please go ahead when you're ready.

Good morning, everyone, and thank you for joining me here this morning. I'm here with Sean Glithero, our CFO; and Michelle Wilson, our Senior Director of Strategy and Corporate Development. This morning, we updated you on our P4 trading and give an update on the progress on our strategy, our driving change agenda. Let me start with a quick reminder of the background of our strategy to give a bit of context before I go into the details. When I last spoke to you in June, I explained the challenging position we were in as we enter the current financial year. We have too much stock. Our buying processes were too deep and too slow. We lack profitability and we have tension in our balance sheet. To address these problems earlier in the year, we refinanced the balance sheet, removing earnings-based covenants from our debt and rebuild our leadership team. I also explained that we have begun to pilot to our new commercial model centered around bringing the most relevant and exciting fashion to our customers, and enabled by our speed to market initiatives, including Test & React, Partner Fulfils and ASOS fulfillment services. I'm pleased to be able to update you on the strong progress we have made over P4 against these priorities, reducing our stock ahead of plan, doubling our profit in the second half of the year and generating cash in the same period despite the expected double-digit decline in sales. I am particularly pleased that we have delivered ahead of guidance on stock which is down approximately 30% since the beginning of fiscal year. We expect to make further progress in the coming year and are well on track to reach our target of reducing our stock back to pre-COVID levels by fiscal year '24 which will continue to drive down our net debt. To achieve this in the current market backdrop required higher levels of discounting, giving up some of our gross margin to prioritize clearing through our summer stock in season. We still expect to deliver EBIT within the guided range as strong discipline on costs, including hitting our GBP 300 million profit improvement target means order profitability is up over 35% year-on-year. While we delivered inventory ahead of guidance and sales and profit in line, we saw sales weaken amid worsening trends in the wider clothing market through July and August. That means some of the cash flow we expected in P4 will now land in the first months of fiscal year '24. We therefore expect GBP 60 million cash inflow in the second half with a further GBP 60 million cash benefit relating to H2 fiscal year '23 in the first period of fiscal year '24, first quarter. Ultimately, we exit the year a significantly more profitable and more cash generative business than when we enter. We have doubled our EBIT in the second half of the year and increase our cash generation by GBP 150 million in the same period with a double-digit sales decline. Before opening up for your questions, I wanted to dig into our progress under our new commercial model, which ultimately enables us to offer more relevant product to the customer. A better own brand and a better assortment of third-party brands by increasing our speed to market. For our own brands, our ASOS Design brand and the rest of our own brands. I'm particularly excited about the progress we've made with our Test & React initiative. We have now launched 500 Test & React options, reducing lead times to around 2 weeks with a 60% of each product run selling through -- in the first 7 days and stock turning 3x faster than our ways of working. On Partner brands, direct-to-consumer, now we have the technology and team in place to rapidly ramp up our Partner Fulfils offer in fiscal year '24, which will provide additional width and depth to our assortment with a more curated local product offering international markets alongside lower inventory risk. Still plenty to do on both fronts and I'm pleased to announce that this morning that Elena Martinez will become our Senior Product Director. Elena joined us as Womenswear Director in August 2022 after 17 years within Inditex. She has been instrumental in the rollout of the Test & React initiative so far and our speed to market initiatives and will become the single leader of the product organization in ASOS, simplifying our decision-making and are accelerating our speed to market. I look forward to providing more detail on our strategy at our full year results presentation on the 25th of October. And with that, now I hand over to your questions. Thank you very much.

[Operator Instructions] The first question we have from the phone lines comes from John Stevenson of Peel Hunt.

A couple of questions to get us going, please. First up, can you just confirm what the actual year-end net debt position was? Second question, obviously, you talked of half the trading declines being a direct result of the initiatives to focus on profitability, profitable orders. Is that still the case? And should we be seeing a recovery into P1? And similarly, you've obviously delivered it, looks like a sort of 2.4% EBIT margin over the second half. Any reason why that should take a material step backwards in the year ahead?

Can you repeat the last one, sorry I got lost in the last one, John. I was [indiscernible] you're too fast.

Yes, 2.4% EBIT margin over the second half by the looks of it on line numbers on adjusted EBIT. Why should that take a material step back? Or should that take a material step back in the year ahead?

Okay. Okay. And so -- let's do one thing. I think on the net debt and on the EBIT, I'm going to ask Sean to answer and I will take care of the other one on the reduction in sales, Sean. And so maybe you want to start, Sean?

Hi, John. Net debt, will be roughly GBP 330 million at the end of the year. About the GBP 330 million end of the year. And in terms of the EBIT, we're not going to be talking about FY '24 today. It's very much about a P4 and year-end trading update.

John -- okay, sorry, maybe you wanted to? Okay. So when it comes to the impact of our own policies on the trading in the last quarter. We still see that not very differently to what we shared with you in the last call. We see that there are certainly 2 different reasons for that. One is external, one is the market. We have seen a market that is still impacted by macroeconomic trends and raising interest rates. And in the case of the U.K., especially also the summer -- the last 2 months of the summer have been especially wet and cold. So there has been an impact, but there is also an impact of our own initiatives. And we still value, that is more or less 50% on each one, the impact. On our initiatives, they are ahead of them. One clearly is all the policies we have put to control our stock and how we have been managing our intake, that has had an impact on the amount of new stock and the [indiscernible] of this new stock, the amount of options which obviously has an impact on our capacity to our consumers. We have also been especially cautious with marketing investments as we announced as part of our -- especially in international markets, as we announced as part of our -- seeing the GBP 100 million profit optimization model. And as we also announced, we have been taking clear steps and clear policies with a specific type of consumers that were especially loss-making. You were asking me about how this is going to continue in the future. And the question, if you want, is that while we have been doing that, we have also been launching and creating this different way of working where we get much closer to the market that we call -- we have a set of initiatives, but probably the most visible one is the one that we call Test & React where we take specific options that we developed during the course of 2 weeks, that is that is as fast as it gets to be honest. And we're very short, very short runs and then we test the reaction of the consumers, we learn and we take it from there. We are seeing a very positive reaction there. And obviously, our plan is to ramp it up during the course of the year. And this is one of the reasons -- one of the main reasons behind the organizational change that I just announced. And what we will see during the course of the year without giving you any guidance that we will have time to that later in the year is that we will be having both things happening in parallel. We are not giving away the discipline and the rigor in the intake and the capital allocation that we have put in place in the course of this year, but we are ramping up our growth initiatives. So we will see, let's say, our performance that will be impacted by both. And obviously, through the course of the year, one will wind down while the other one winds up. Sorry, very long answer.

That's great. No, I appreciate a lot of -- not an easy question to answer, but that's pretty clear. So yes, basically, it should be a recovering trend as one starts to kick in any other drops away.

Yes. Thank you, John.

We now have Simon Bowler with Numis.

I was just wondering, looking at kind of the P4 trends, it feels like kind of Rest of World was sequentially a reasonably slow as well in the U.S. Were there any kind of further changes to the offer proposition that we've put in those regions, whether that be kind of delivery returns or pricing, I guess? And then my second question was just if you can -- if you're able to share any kind of sense of where marketing spend came in across the second half, fair to assume that remained a similar percent of sales as what we saw in the first half? Or when you talk about restrained marketing spend -- was there another kind of a leg down that we witnessed in the second half?

Okay. Let me take the first one, and Sean will take the second one. Well, first of all, good morning, Simon, you were asking me about any further changes in international proposition. And the answer is not really. But let me give you more color on it. So in terms of assortments, we have not increased any changes. What we have seen during the course of the last months, especially during the last 2 months is more of the impact of our control of intake. That has had an impact, not only in the international operations, but globally also in the U.K. because as we were explaining, we have been very, very, very cautious with the intake, and that has had an impact in the amount of newness. And just to give you a point of reference, the weakest point in the whole year was July, where the amount of newness was lower versus last year. And then we have started to recover from there. But as I said, that is not especially having an impact on the international side, but globally. On the returns, we have always said that we commit and we still say, by the way, that we're committed to free returns in our core markets. So obviously, that has not had an impact on our core markets, but it's also true that we are testing some systems on some other markets where we are either charging for returns in smaller markets like Croatia or Lithuania or even in Australia. And we have started to test the charges for returns after 14 days, so 14 days of free returns in some markets like Portugal or Poland or Belgium. So some of these operations might have got impacted by that change in returns. In terms of pricing, no changes at all specifically in the last month of the year. And maybe I hand over to Sean.

Simon, I think second half was characterized by good cost discipline across the piece, and that was the same for marketing as well. We took the opportunity to invest a bit more of the gross margin in markdown and use that as our marketing tool. And actually, marketing did take a step back year-on-year, both in sort of absolute and percentage of revenue terms.

Sorry, Simon, one last addition to finish it on. One last addition on my hand -- on my side. I think that what we have seen and is not internally more external, is that in some of the international markets, especially the U.S. and Germany, probably a deterioration of macroeconomic conditions, that we have seen. In Germany, it seems to be clear. But it's more external than internal. Thank you, Simon.

We now have Georgina Johanan from JPMorgan.

Just a few from me, please. Just the first one, with regards to the gross margin investments that you made in the quarter around the discounting activity. Just wondered if you have had any reaction from your brands on that? Are they -- how are they seeing that? Are they kind of worried about that alternatively, are they happy with sort of how the new commercial model looks like is playing out and they're kind of focusing on future. Would just be interested around any conversations that you're having with them, please. Second one, on the stock position and kind of the breadth of the options that you have had. I mean I understand that you said previously that the kind of -- the number of options being narrow as kind of weighing on performance. But at the same time, your stock position right now is kind of lower than initially targeted. So as we go into autumn/winter this year, would you say that the breadth has actually improved? Or are you still lagging sort of materially behind where you would like to be? And then just finally, could you update us on the outlook for pricing, please? Because I think previously, you've mentioned that you expected some price reductions coming through at the back of the end of this year, but yet an update on that would be helpful, please.

Yes, sure. Let me go one by one. So on the gross margin investments, we are always behaving within the partnership we have with our third-party brands. So we have not really crossed any red lines or than any anything crazy in that sense. Our relationship with all our core brands is still very healthy. We are seeing actually if anything and strengthening of that relationship. They are seeing more and more the value of ASOS as a different partner versus other partners. And because of all the type of -- if you want content and context we can give to the brands and how we can integrate them into our styling. So no negative reaction whatsoever, quite the opposite. Obviously, if you want, during the course of the year, we have been very cautious with intake and that created certain conversations with the brands, but that has not been new during the last quarter. That has been over the course of the year. And as we said previously, we have always done it within the spirit of partnership in a very constructive way. So no big brands or relevant brands have had any issue with us during the course of the whole year. On the stock position on breadth, as I briefly mentioned before, let me take one step back here, if I may, Georgina, because -- let me try to explain it. I always like to use images. Let me try to explain what we have one on the stocks so that it can help understand a little bit of the story. And then, when I explained that, I always use the image of a bath tub. And how do you empty a bath tub, and there are several ways to do it. One is that how do you renew the water of a bath tub? One is that you struck the water and you put all new water. That's very fast, but it's very expensive, especially when you have in the bath tub is stock, not necessarily water. The other one is that you have to control the inflows and outflows within the bath tub in a way that you can optimize the renewal process. And this is what we are doing because this is the best approach for our shareholders and our stakeholders. So basically, in the balance, we are always trying to keep a balance between what we are exiting through clearance and when we are adding through intake. We have been cautious with intake. And during certain moments of the year, the balance has been negative versus last year in the sense that while the total number of options that is really big for ASOS was not very affected, the total number of new auctions was seriously affected. And that has reached its lowest point in the month of July. Where the percentage of the newness or even the size of the newness in ASOS was smaller. That has started to recover as of August and will continue recovering during the course of the year. In September, we are in a significantly better position. And which means that slowly, but surely, we will get where we want to be, but we're not there yet. It's going to take a few months still to get where we want to be. Then on pricing, you were asking me, I always say the same. We don't price cost plus we price competitively, so we look at our competitors, and we try to stay in a region where we feel we are competitive. We were feeling that at the beginning of this fiscal year, there might be a price reduction in the market coming from efficiency gains from the supply chain. So we have applied this price reduction as we were expecting that our competitors would. The good news is, I would say, is two. One is that we have -- obviously, we continuously check and monitor our prices versus our competitors. And what we see is that our investment has kept us in the area where we wanted or even in some areas, we have even on competitiveness. So we are happy with it. And the other piece of good news is that the level of efficiencies we have managed to create in our supply chain through consolidation of fabrics, consolidation of suppliers, improvements in our logistics has enabled us to come with this price decrease and to strengthen our intake margin. So we are very happy with the situation. Obviously, we stay vigilant to the market, as I said, because we look at our competitors. This is a moving animal. And at any point in time, we see that we are losing competitiveness, we will react. Thank you, Gina.

We now have the next question from Nicolas Katsapas from BNP Paribas Exane.

I actually just have one. It's just a comment that you made around the FY '24, which is sort of piggybacks on what Georgina was asking now, will you say that the elevated level of discount is likely to persist. I just wanted to know when you think of the promotional environment, who the key players are that might be putting pressure on the market to promote because we've heard from some larger players already, and they seem to say that full price sales are almost at record levels. So I just wanted to know who do you see the other players that are promoting.

Okay. Thank you, Nicolas. Sorry, I'm writing down the question. Otherwise, I'll forget it. Well, let me clarify what I said, what I said is that we are going to continue with our discipline to clean stock. We announced that we wanted to go down to around GBP 600 million of stock or in the pre-COVID level, stock levels. And even though we are well underway, we have not finished that journey. So we will continue doing that. And when we're talking about old stock, and I think this is important that I stress that where old stock it is taking an asset level of effort. Whether this is elevated discounts or not, obviously, it will depend on the evolution of the market and let's say, in environment and the sentiment of consumers and so on and so forth. But what we -- what I was saying is that we will not hesitate to continue doing what we have done to clean this old stock. Then when it comes to new stock, what I was sharing somehow is that what we're seeing is that consumers are interacting very well with our new stock, and we have been able -- I talk about all our new stock. What we are seeing is that full price or if you want sell-through, full price sell-through, whatever you want to call it, is accelerating 50% versus last year. Whether this is a historical maximum level or not, to be honest. I don't think I have this historical memory of ASOS, but clearly, versus last year, there is a relevant improvement on the new stock. When we talk about our Test & React that is a part of this new stock and is the part where we have changed more drastically our process and our way of working. We see that the acceleration is significantly bigger. We see that we are selling 60% of the size during the course of the first 7 days, which is quite remarkable with no promotion at all. So we -- I would agree that we see -- when we provide our consumers with the right size at the right price at the right moment, there is appetite for this type. This is not a war, if I can use that, that were over of discount is a word of relevant product at the right time and at the right price, not at the cheapest price or anything like that. So I'm not sure if there is someone specifically putting pressure or not, or it's the market itself. What I said is that we will -- we will -- if you want to have in parallel these 2 policies. One is ramping up our newness and ramping up our capacity to bring more exciting spend to the consumer, while at the same time, keeping the discipline to make sure our stocks are clean and lean because this is a foundation to ensure the success of our new commercial model. I hope that's clear, Nicolas.

Yes, that's very clear. But I mean, you've spread on another question, unfortunately. I just wanted to sort of get a sense of like how would the consumer be able to tell or how have they been engaged to distinguish the newness from that stock that you're trying to clear through? Because it's all on 1 platform, and it's all on asos.com. And I've read recently that you are considering removing your outlet tab. So I just want to understand what is the consumer's perception of this? How do they get these 2 different models?

Well, that's a good question, Nicolas. Probably there are a couple of questions within the question. One is on the outlet and the other one is how do they make the difference. What we are doing is that, yes, we are -- as we announced, we are focusing on a commercial model that goes in the direction of newness and excitement and inspiration. So obviously, selling the 1 year, 2 years old lines of certain brands does not really go in this direction, and that's what we're doing with the outlets. So we are being consistent with the direction of travel that we -- if you want draw 12 months ago, and we have been deploying during the course of this 12 months. Our consumers make the difference. Trust me, they do understand very well what is new and where it's not new. Our consumers visit our page quite often, and they know exactly what is new and what is not new. And we also have ways to let them know, but like New In, for instance, which is the most visited page in our site or in our app, but they do understand and what is even better, they behave accordingly. So when we give them -- Sorry, I'm going to go back to my famous image of fresh fish. When we give them fresh fish, they understand that is fresh and they buy it fast. When we give them a stinky fish, they know it's stinky and they don't buy it. So it's like our consumers have a high level of fashion understanding.

We now have Matthew Abraham with Berenberg.

First one just relates to cost items. So you hopefully called out trade and duty costs as providing some [indiscernible] through P4. Are there any other cost items that might be unwinding, which we could expect some margin benefit from in FY '24?

So I'm not going to talk explicitly about FY '24, but we're pleased with the cost progression in the second half and the cost discipline we've had. And we're improving on most lines actually. And we're seeing benefit from the lower stock come through the warehouse and the network in terms of levels of storage and handling. So we're seeing that benefit from being a leaner, more efficient business that turns to stock quicker as well as general cost discipline that would want to continue.

If I may, Matthew, we announced this ambitious program that we call internally, and I think also externally back to basics of more than GBP 300 million impact. And obviously, the initiatives under this program were not in place at the first day of the fiscal year. So during the course of the fiscal year, we have been implementing more and more, we have seen a bigger impact during the course of the second half and especially the last quarter. And we will see these impacts going on over fiscal year '24 without giving any guidance or anything like that. But I think that we are very happy with the evolution of the cost lines, pretty much most of them supply chain and general cost over the course of the last months in line with this program.

Excellent. And one more, if I may. Just on the Test & React proposition. So it sounds as though the pilot program is going really well. Could you just please remind us what the reach of that program might be when fully ramped? And it sounds as though you're expecting it to be fully run some time in FY '24?

Well, that's a difficult question. Let me -- we are extremely happy with the program. I think the program is proving the point that we can really sell. We can really create that type of engagement with our consumers of -- that is more -- a little bit more based on inspiration, more based on newness. And when we do that, we see that our consumers are buying immediately so much faster and at full price with no discounts. We're also seeing that the people buying more into these styles without us doing anything, any manipulation on our end tend to be younger. So that goes more into our core consumer. That is also very, very reinforcing for us. And obviously, this is still very small as we said, it's only 500 options, and our ambition is to ramp it up as big as possible, as fast as possible. The first step in doing that is the organizational change we announced this morning and Elena, she is an expert on this model. She has been very well trained on this model, and she has been the creator of this model within ASOS. And the ambition is to take it as far as possible. Whether we are giving today guidance on how big it is or not, probably not. But we would like to make this program relevant by the end of the fiscal year. Probably, I think it's something that we should -- we can tackle more in detail when we meet in October.

We now have Monique Pollard of Citi.

Just a few for me, please. The first, just any commentary on current trading. I'm just conscious that, obviously, the September retail sales from CBI, yes, they will be. But then at the same time, that you commented a few times that your newness obviously trust in July. And since then, if it's been improving, I just wonder if you're seeing any consequent pickup? Secondly, in line with that, as the unit ramps into next year, I'm just wondering if we could potentially see a return to a bit more marketing investment without any specific guidance on the numbers. Just given as well, one of your large competitors has talked specifically about stepping up marketing spend in the second half of this calendar year, particularly for the last quarter of this calendar year. And then the final question, just on the inventory positioning. Obviously, you're ahead of target there, but you still got a 20%, let's say, reduction in inventory to come in FY '24 to get to your guidance. You've talked about this Test & React pilot ramping up. I'm just wondering how much of the inventory reduction can potentially, either this year or over time, come from things like that Test & React pilot and just more efficiency in the purchase rather than continued aggressive promotions.

Okay. Thank you very much. Yes, I'll try to go one by one. So on current trading, without giving any detail what we are going to see, not only now, but during the course of the next months, is, in my opinion, still volatility. So -- and let me go back to the reasons why P4 was the way it was. Part of it is external factors, and this is not unwinding. So actually if anything is, as I said before, is getting a little bit more concerning, especially in certain geographies. As I said, Germany and the U.S., particularly, but there might be more. So I think volatility is going to be the name of the game, probably still for the next months to come. And internally, we will see this evolution during the course of the year. We will continue with our discipline and our rigor in execution and in costs and in capital allocation overall, but we will also start increasing this -- the weight of all our new initiatives. We are talking a lot about Test & React, which I love because I'm super excited about this one, but they're not the only one. We are doing other things. We are working on direct-to-consumer. We are working on ASOS fulfillment services. We're working on accelerating our intake overall. So there are quite a few, and we will continue ramping them up. So slowly, but surely, there will be a change in the trend. It's going to take some time. The good news is that we have finished the year being a more resilient business, a business that generates profit, a business that generates cash and at the same time, it's able to cope with the inventory problem. And that is the great news that the business can continue doing that and accelerating the growth initiatives. So it will take some time to see a change, even though there is an unchanged in how the consumers are behaving. In terms of marketing. Obviously, we are super excited to go back to growth. And our ambition is to create more and more qualitative relationship with our consumers, more inspiration and relationship with our consumers. And without giving any guidance, obviously, this is something that we will always keep in mind. And whenever we feel ready, we will we will go behind that idea. So we're not saying no, but we're not announcing anything. I don't know if someone has announced something that's good. But I think in our case, probably it's better to wait until October, where we can come with something more detail. But our ambition, as we said, if I may, let me take one step back. What we have done during fiscal year '23 is the beginning of a journey. We took a lot of the difficult decisions in terms of stock, of profitability, of people. As we announced, we took a lot of difficult decisions during fiscal year '23 to create the foundations for growth. Our ambition is not only to produce cash and profit. But of course, it is, but it's also to grow. And we will put our resources behind that as soon as we feel it's the right moment to do it. And then finally, on the third question on inventory and how much this is going to come from Test & React and how much of this is going to come from cleansing. To be honest, I cannot give you a quantitative answer on this one. We -- and environment is not only Test & react, all the direct-to-consumer and ASOS fulfillment services initiatives will help us to reduce the weight of our inventory. And we will -- we are ramping up also during the course of fiscal year '24, but there will still be a little bit of clearance. We know that we have a certain -- if we look into our stock right now, the stock that we need to tackle right now is the stock that has between 6 and 12 months. And part of this is stock up. It's our own stock, so we will have to have both. Obviously, as we go over the year, we will see less of the clearance and more on the other initiatives.

We now have Ben Hunt from Investec.

I think you said in the call, if I heard you right, that the benefit of the GBP 300 million cost savings was more commenced in Q4. I know in the past, you said the annualized effect of that next year will be about GBP 85 million. I was just wondering if you could give us any thoughts now as to there will be any more momentum in terms of cost savings for next year. I appreciate your limits on how much guidance seeking with that.

Yes. So there will be some momentum. We kind of ramped it up through sort of Q2 last year. So there will be that sort of we won't lap until we kind of get to Q2 this year although it ramps up. So there will be some momentum benefit, which will sort of largely be lapped by the time we get to the sort of the end of the calendar, start of next year's calendar.

Okay. And then obviously, I think most of your profit you've made in the second half was largely done in Q3. Were there any particular operating cost headwinds that have come out that were slightly higher than you probably expected?

I wouldn't say so. We talked -- again, we've talked about GBP 300 million that grew through the year as sort of -- as we got more months under our belt of each initiative. We've seen the benefit of the lower stock, we put effort into managing the cost base. And both Q3 and Q4 were profitable.

Okay. And then finally, just on the cash to get the GBP 60 million back in September and October, is that dependent on the level of sales normalizing for that to occur? Or is it independent of -- in Q1?

It's independent and mechanical. I think in the point on the cash is that it was much improved year-on-year in the second half. And really, the cash being lower than we expect is very much a function of trading towards the back end of the year and just the timing of flows when the sales are less at the right at the end of the year, you lose the gross sales with the associated BAT, the benefit doesn't come through until the other side of the year in terms of both paying across lower BAT, paying across lower returns. And from an accounting point of view, you can take the benefit in FY '23, the lower cost base on the variable costs, but you don't actually pay less to the suppliers until FY '24, when that's fall due. So it's mechanical.

Our final question comes from Anne Critchlow with Societe General.

I've got 2, please. First of all, the EU sales trends seem pleased week. So I just wondered if there were any markets in Europe where you saw growth, I mean, particularly any important markets? And then the second question is really about the phasing of the initiatives you took to focus on profit rather than sales. So I understand you started this in January last year, so beginning of P2. How does the phasing of those initiatives work? So were they much heavier in the second half, for example. So if we're thinking about, say, P2 and P3 this year, could there be sort of incrementally much heavier initiatives in terms of focus on profit rather than sales?

Yes. Well, on the EU is true, we have seen a better performance. We have seen -- actually, we have seen a better performance across many markets, not only one. Not only Central Europe, but also Southern Europe has had a better performance than some other areas. Where we have seen one market with sustainable growth. The answer is, unfortunately, no. What we have seen is that in some markets that we are running certain tests, we see that we are managing that in a potentially better way, and it's giving us some things to manage the rest of the markets, but we are not there yet. So it's also true that the macro conditions, the macroeconomic conditions in Continental Europe, the interest rates have not had such a big impact as they have had here in the U.K. So -- but no, we have not seen growth, but we have seen better performance, especially in -- it was particularly pleasing Southern Europe and some core countries in Central Europe.

Yes. And on those -- that cost savings and prop optimization. We said in the first half that we we've done over GBP 100 million. So therefore, a function of math, you can tell that majority 2/3 of it was in the second half. And if you go back to early late last year, we talked about headwinds being 2/3, 1/3 mitigations being 1/3, 2/3. So it did come through in the second half, and we'll, as I said previously, roll into next year until it's flat.

Thank you. I'd like to hand it back to Jose for any final remarks.

Well, thank you very much, everyone, as always, for being with us this morning. As I said at the beginning, we are very excited to see that we are moving forward within a volatile environment, but we're moving forward that we are getting -- we have set the foundations for growth. And that we have also -- have started to see that some of our new initiatives are giving us very promising green shoots. And looking forward to seeing you all in October, where we will come with more detail and some, obviously certain guidance on fiscal year '24. So wish you a good day. Thank you very much.

Thank you all for joining today's call. I can confirm this has now concluded. Please have a lovely rest of your day. And you may now disconnect.