ASOS' (ASOMF) CEO Nick Beighton on Period 3 Trading Update - Earnings Call Transcript

ASOS plc (OTCPK:ASOMF) Period 3 Trading Update Conference Call July 13, 2017 4:30 AM ET

Executives

Nick Beighton - Chief Executive Officer, Executive Director

Helen Jane Ashton - Chief Financial Officer, Director

Analysts

Andrea Ferraz - Morgan Stanley

Charlie Muir-Sands - Deutsche Bank

Anne Critchlow - SG Securities

Michelle Wilson - Berenberg

John Stevenson - Peel Hunt Ltd

Georgina Johanan - JP Morgan Cazenove

George Mensah - Shore Capital

Adam Cochrane - UBS

Richard Chamberlain - RBC Capital Markets

Simon Bowler - Exane

Andrew Porteous - HSBC Global Banking and Markets

Operator

Good morning ladies and gentlemen and thank you for standing by. Welcome to today's ASOS Period 3 trading update conference call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions]. I must advise you that this conference is being recorded today, Thursday, July 13, 2017.

I would now like to hand the conference over to your speaker today, Mr. Nick Beighton, the CEO. Please go ahead.

Nick Beighton

Thank you, Carla. Good morning everybody. Thanks for joining our Period 3 update on our trading segment for the four months through June 30. On the call with me, as usual, is Helen and Greg. I am just going to take you through a couple of the key things for the last four months and then we will open up for Q&A.

So first of all, sales came in at just under £670 million for the period, which show continued strong sales growth showing great momentum. P1 was £36 million year on year growth, P2 was £42 million and P3 was £32 million. If you look at a two-year comparative, that's a slight acceleration. Overall, the group sales were up 32% supported by huge customer facing investment into both price and proposition, which is a really strong performance given the fact that we kept our product very tight ahead of and during the transition to significant supply chain change and opening up of Eurohub 2.

The international performance has again been excellent, up 44%, with rest of world being a standout performer. Internationally, we have seen 32% growth in our active customers which is a great all-around performance, which is still very much for us to play for. U.K. sales is now 36% of our retail sales and has continued to outperform what appears to be a very tough market for the U.K. consumers. It's slightly behind what I indicated earlier in the year, but still a very strong performance at 60% year-on-year.

U.K. active customers have grown by further 13% and is now over 5.2 million and interestingly we have seen a whopping increase in our Premier customers up 42% year-on-year. Mobile now accounts for nearly 8% of U.K. traffic and over 70% for the group as a whole. After significant price investments at the retail gross margin level, I am really happy that group gross margin of retail level remains flat and marginally down the total growth by 20 basis points. Importantly, our consumer KPI is moving in the right direction. We have seen another increase average order frequency at 6%, another increase in average basket value up 3% and another improvement in conversion, up 10 basis points.

The major investments are going really, really well. I am very happy with the transition and the landing of the operation in Eurohub 2 and also the fact that the team responded brilliantly with a small fire we had during the period. Fulfillment from the Eurohub for European orders is now over 70% by the end of July. We were close to completing the deal with the U.S. warehouse and we will be in a position to communicate that shortly as and when we finalize the commercial terms.

In terms of full year guidance, this remains unchanged of we spoke to you about last time. We are anticipating reported sales growth at the upper end of the 30% to 35% guidance we gave you. No change to gross margin, broadly flat and full year PBT expectations remain in line with consensus. We are expecting CapEx in-line with the range we gave you, probably towards to the top-end of the range and in the medium term we are reiterating our guidance of the 20% to 25% sales growth level and a 4% EBIT margin.

Okay. Operator, I would now like to hand back to some questions.

Question-and-Answer Session

Operator

[Operator Instructions]. Our first question comes from the line of Andrea Ferraz. Please ask your question.

Andrea Ferraz

Hi. Good morning. I have two questions please. Firstly, you have mentioned that the supply has been tight over the period as you transitioned into the Eurohub. At the same time, the comps are getting tougher in Europe, as you are starting to introduce, say, free returns last year. So how do we think about growth rate going forward? Would you be able to keep them may be in line with what you have been delivering this in spite of the tougher comps? And then the second question is, also in Europe what are the countries where you are seeing the best growth rates and what countries are most excited about looking forward? Thanks.

Nick Beighton

Okay. The line crackled a bit there. So I didn't quite get the full question on the first one, but I think it was about the tighter inventory going into the supply chain change. Yes, we tightened up our stock going into there. Trading stock is turning faster than it ever has been. So on a trading basis, it will be six weeks trading cover. I have never seen us achieve that consistently. So I am delighted. At the same time, we have seen a massive improvement which is a continuation for the holiday season on full price sell through. So I am delighted we achieved both of those. And those are critical trading strategies and very critical ahead of the very significant infrastructure change around the Eurohub.

We have also learned an awful lot below during the Eurohub transition. So we definitely have less growth in the We have room in the tank for next year. As for what the future rates are coming, growth rates coming out to year out of Europe, we are pretty happy with our medium-term guidance. So I am not going to go and give you a prediction on what the growth rate coming out of Europe is. But we have definitely learned some more during our supply chain change and we definitely have opportunity to address next year, which is pleasing.

In terms of the Eurozone areas we have seen the most exciting growth, Germany and France have been great in terms of cash growth, but we have also seen some strong growth coming out of Italy and Spain and we will continue to see great performance out of the Scandi countries. But by size and scale, France and German are still the biggest component of the European sales.

Does that help, Andrea?

Andrea Ferraz

Yes. That's very helpful. Thank you very much.

Nick Beighton

Great.

Operator

Our next question comes from the line of Charlie Muir-Sands. Please ask your question.

Charlie Muir-Sands

Good morning guys.

Nick Beighton

Hi Charlie.

Helen Jane Ashton

Good morning.

Charlie Muir-Sands

Hi. First one on the U.K., obviously a tiny slowdown but that's quibbling. I just wondered whether you have seen any change in consumer behavior in your U.K. customers in terms of what they are buying, how they are buying and in terms of the competitive landscape whether you are seeing or where you are seeing the most increase in intensity of promotions, whether it's online or high street, for example?

Nick Beighton

Okay. The biggest change I have seen in the U.K. that I am pleased about is another acceleration in the Premier offer, up 42%. That's a really meaningful step on in our Premier membership base. So I am really delighted about that future opportunity for us. In terms of promotional environment, the U.K. has always been the most competitive, particularly in the womenswear market and we are seeing an awful lot of pricing and promotional competition both online and offline and we compete with both. So you are seeing that yourself. You have seen the number of the companies in your sphere of influence. So I don't that's a surprise to you.

Was that the full question? I can't remember now, Charlie. I am rather [indiscernible].

Charlie Muir-Sands

Yes. And then the second question, Australian GST. Last time you spoke, you weren't a 100% sure whether you would be taking the pain yourself, passing it on or how you would be managing that. I just wondered if you could update us there and what that means for next year when you have most of the financial year of effect of that?

Helen Jane Ashton

Yes.

Nick Beighton

Yes. Go ahead.

Helen Jane Ashton

Yes. Well, the good news, Charlie is that, of course, that we thought that it was going to come in in July of this year and it's actually being delayed for at least a full 12 months. So we actually don't need to worry too much about the impact of that certainly this year and next year which is good news because anything that we save from a cost perspective there obviously just gives us opportunity to continue reinvesting to drive that topline growth within the business. So it's not something that we need to worry about for at least another 12 months, Charlie.

Charlie Muir-Sands

Right. And then one final one, if I may, just in terms of your medium term guidance. So looking forward into next year, is there any currency tailwinds left in your hedging, where things fit today? And does that 20% to 25% apply to 2018? Or do you think you can carry the momentum over a bit and above that?

Helen Jane Ashton

Yes. So I mean you are aware that we hedge out over two years. So we have currency tailwind going into next year. So I think you have already asked about what's the U.S. currency tailwind for next year and I have said it's kind of three, four, five-ish percent kind of at that range, but we are still pinning down numbers and we will update you more in October on that process. I think from a topline perspective, I think no change to what I said back at the half which was, it's very unlikely we will see growth drop from 305 to 35% down to 20% to 25% by the time I give guidance in October. So I think we will start to see some normalizing over the time but I expect that that medium-term guidance is probably going into the financial year after the next one.

Does that make sense?

Charlie Muir-Sands

Yes. It does, yes.

Nick Beighton

All right. Thanks Charlie.

Operator

Our next question comes from the line of Anne Critchlow. Please ask your question.

Anne Critchlow

Thanks. Good morning all.

Nick Beighton

Hi Anne.

Anne Critchlow

Just wondering how you are thinking about marketing spend these days, in particular sort of retargeting customers and keeping their loyalty? Because I think you have said in the past that Generation Z doesn't like email. So does that mean you have to spend a great percentage of sales on marketing as time goes on?

Nick Beighton

They don't like email. They love social. So we have got something like 20-odd million followers through every conceivable social channel that you can imagine. Wherever our customers are, you will find us. Email is still a very effective communication tool but actually we will be migrating far more of that through social which is some of its free, through paid social which isn't obviously and through digital marketing. We will also just reevaluate what we will do with marketing going forward, the role of marketing, whether we will try some things that we haven't tried for a while.

So I know that doesn't necessarily answer your question directly, but that's kind of where we are thinking right now. Does that help, Anne?

Anne Critchlow

It does, thanks. Just a quick follow-up on that. So thinking about social media, is that going to, is that going to be a bit of a drain on you as you go forward if you have, say, in-app buy buttons and they are shopping within the app and social media is creaming a bit off from you?

Nick Beighton

I don't know whether it would be a drag or whether it would be an enabler, but certainly with potential buy buttons coming through social media, they are actually attempting to capture the customer journey. That's the potential threat rather. Actually it will also be an enabler too. So it's not a binary answer, that one, I am afraid.

Anne Critchlow

All right. Thank you.

Operator

Our next question comes from the line of Michelle Wilson. Please ask your question.

Michelle Wilson

Hi. Good morning.

Nick Beighton

Hi Michelle.

Helen Jane Ashton

Good morning.

Michelle Wilson

Just a follow-up question on EU. You mentioned your inventory position was tight into the quarter. How is it now kind of heading into Period 4? And then since the migration, have you started to make any improvements to delivery proposition across the EU? And if not, kind of when can we start to see those come through? And do you ultimately think you can get the EU delivery proposition as strong as you have it in the U.K.?

Nick Beighton

So let me start with your last two questions. So you had heard in my opening remarks that 70% of the orders for the EU, they fulfilled out of Eurohub at the end of June. So that means 70% of the customers are getting a better delivery proposition than we signaled. Now that's great. Now ultimately I want far more of that and our mission is to keep ramping that. So we are fulfilling a greater number of orders out of the Eurohub. So more of our European customers can have that better proposition. In terms of the stock levels going to Q4, there is a very similar stock turn going into Q4, a slight rebuild but nothing dramatic.

Michelle Wilson

And just in terms of whether you can get Eurohub or European delivery as strong as you have it in the U.K.?

Nick Beighton

Sorry, I missed that one. Sorry Michelle. That's the aim. So if I go back to what we have achieved through Barnsley over the years, six, seven years of Barnsley, we started up with a 6:00 PM cutoff for next day delivery. We are now at 12:00 PM cutoff in the U.K. The fastest order goes through Barnsley in less than an hour. The average order goes through two hours and 15. That's the exact infrastructure we are building in Eurohub 2. We might not be able to get exactly the same quality of cutoff throughout the European Union because the geography doesn't always help you. But that's our aim to improve the cutoffs and improve the speed of deliveries for the European customer.

Michelle Wilson

And is that the time frame we should think of? Is it six, seven years as well for Europe? Or can you do it faster now?

Nick Beighton

I think we can do it faster. We have learnt an awful lot and we have built out the Eurohub far quicker and we will automate this far earlier than we did in Barnsley as we have already signaled. So I am hopeful it will be a lot quicker.

Michelle Wilson

Brilliant. Thanks a lot.

Nick Beighton

All right, Michelle.

Operator

Our next question comes from the line of John Stevenson. Please ask your question.

John Stevenson

Good morning all.

Nick Beighton

We are your European cousin, John.

John Stevenson

It's not like I could have convinced some as much but it worked. Just going in with a question on personalization and data usage rate. Just interested, is there any highlights you can talk about in terms of what you are doing at the moment? Particularly interested in the trading KPIs at a frequency basket? To what extent is that down because of kind of the hygiene factors, payment options and so on versus what you are doing to actually drive the wider proposition in terms of data usage? And a second question just on Premier's 42%. I mean, it's a massive leap. Is there anything in particular that's behind that?

Nick Beighton

Yes. An amazing proposition, John.

John Stevenson

I knew you were going to say that.

Nick Beighton

Why did you ask me then? So let me talk about personalization and data usage. This has now moved to a whole different game. This is now data science and artificial intelligence. So we have had recommendations live on our apps for several years now which is data science and AI using data to power customer choices. So we are now doubling down on taking that through a different level. So those using data to enhance the customer experience. So every customer come through the app is getting a better experience next time he or she comes and after journey she is following or he is following, is enhancing the journey for the next person after him or her. That's really exciting.

So that's where data usage through data science and Ai will go. It will also be quite transformational in some of our cost lines when we figure out how we can best deploy it. In terms of recent things during the proposition, there has been loads of investment in better tracking, faster deliveries. We are now looking at faster refunds. You know we went live with Apple Pay and I have talked about that when I saw you for the half-year results and showed you the user journey with that. We have got a ton more payment methods coming through now. We have learned the micro-service architecture. Payment methods will come in through far quicker than they have ever been.

We have got a couple of exciting ones due to land over the coming months in the U.K. particularly. Visual search is now live, which I demo-ed for you guys when I saw you in April. I am super excited about that. That's using data and AI to personalize choices in a different way. We are trialing some other AI whose nickname is AVA. AVA is the ASOS Virtual Assistant. She is pretty amazing and I will talk more about her in October. And we have had Fit Analytics live now for the best part of six to nine months. Fit Analytics solution is using data and AI to give you greater confidence in the product purchased by size and we are seeing good benefits come through on that.

Does that help, John?

John Stevenson

That helps. It's a nice lever and just roll them on just in terms of athleisure. Where are you in terms of sort of the, obviously you have got a lot of branded stuff on that, in terms of building your own ranges? And are you happy with sort of what you have got coming through in the athleisure offer now have been released?

Nick Beighton

So we call it active wear and sportswear. And following the settlement at the start of this financial year, we have amplified our branded offer first of all and you will see, if you go through you will see how it's been shot and presented in a beautiful way. It's largely driven by third-party brand growth now but coming in autumn 2017 you should think of ASOS surf, ASOS ski, ASOS skate, ASOS yoga, ASOS running, ASOS everything active will be amplified with an ASOS branded offer to sit alongside our branded offer. So another multi-brand offer in active and sportswear.

John Stevenson

Okay. Brilliant. Thanks Nick.

Nick Beighton

All right.

Operator

Our next question comes from the line of Georgina Johanan. Please ask your question.

Georgina Johanan

Morning guys.

Nick Beighton

Hi George.

Georgina Johanan

Just two quick questions for me, please. First of all, thanks for the guidance on the CapEx. You have obviously highlighted that that's more likely to be at the top end of the range for this year. Just if you can give any commentary on how we should be thinking about that kind of next year and into the medium term, particularly given the U.S. sort of warehouse looking closer to being confirmed, should we be expecting a bit of an uptick there going forward? And then my second question was really just around availability. It sounds like that's been quite high over the quarter, obviously given the stock position. But where you have been sort of dialing up the Eurohub and seeing like improved availability for a specific region, I guess, has that helped conversion at all? Is there anything that we can still read into that positively or negatively?

Helen Jane Ashton

All right, yes. CapEx, George,, well I am anticipating CapEx for next year to be at least at this year's level, if not a little bit more. So as you said, obviously as we saw sought to build out the U.S., we will just start to see some of that come in through certainly into next year. So yes, at this year's level, if not a bit more, I think is probably the guidance. But I will give you more of a view in October.

Nick Beighton

What was your second point on availability, George?

Georgina Johanan

Just like with sort of the Eurohub ramping up, presumably you have got improved availability for a specific region, i.e. the EU and where that availability has gone up, is that actually driving a better conversion rate? Or have you seen examples of that? Or is it just a bit too early to say?

Nick Beighton

No, it is not too early to say. This is where something as important as a fire gives you some perfect evidence. So as we switched over by territory, we saw better availability, huge availability on the line level for customers in the European territories and we saw some very dramatic conversion increases. Then we switched, which was nice. So we are looking for those things to continue. Obviously, we don't have to switch everything back again because of the interruption for the buyer. So we have actually got the opportunity to reverse test the theory on whether it was the availability through the enhanced stuff with the Eurohub 2 that was driving conversion. So that was where something as unfortunate as a fire, which we recovered beautifully, gave us some further evidence to back sell all something that we would start to see. So yes, the things you just described, exactly what we saw.

Georgina Johanan

Thank you.

Nick Beighton

And I said at the start, we had learned some new lessons through the transition. That's the main one.

Georgina Johanan

Thanks very much.

Operator

Our next question comes from the line of George Mensah. Please ask your question.

Nick Beighton

Hi George.

George Mensah

Morning all.

Helen Jane Ashton

Hi.

George Mensah

Just a couple of questions on, we talked a lot about Europe on this call and a little bit on the U.S. If you could perhaps give us some thoughts on your longer term ambitions in the rest of the world? I know it's not a focused region for the business but it is clearly growing at a strong rate at this moment in time. And also, just in terms of the U.K. on a three to five year view, what sort of ballpark you would aspire to grow the business up sort of on that cargo growth rate?

Nick Beighton

Bloody nice, George. So nothing tricky then.

George Mensah

I am trying to keep it simple.

Nick Beighton

Yes. Thanks for that. but I am going to have to decline some of those long-term growth rate projections, right, by territory. We have given the medium-term guidance of 20% to 25% that we are standing behind. What I do anticipate is a continued acceleration in our international business from both Europe and U.S. predominately but also a growing mix coming from the rest of world. And we will have to respond to that in terms of supply chain investment, logistics investment and things like that which is what I signaled last time. But for now, our medium-term focus is to completely Phase 2 build out Eurohub 2, which will be finished sometime next year. And then, in parallel, we will be building out the U.S. warehouse. We will probably end up with different, with at least two warehouses in the U.S. over fullness of time and I will be surprised in the medium-term we will be coming back round and going, the volume of demand from our customers has now got to a point where it will be advantageous for service proposition and actually delivery cost to put some infrastructure into the rest of the world. But we are not there yet. We just know that's a potential.

Does that help you?

George Mensah

Yes. Thanks very useful. Can I ask just in terms of the U.K. then? Is price investment largely over there as a whole, I mean obviously, as a margin, your responses changes in market dynamics. Is price investment still around the agenda in terms of the U.K.?

Nick Beighton

So I have been very consistent that actually we are going to hold prices in the U.K. and we have. And so actually, given the inflationary pressure coming through in the U.K., holding prices is actually a price investment relative to our own cost inflation and also what the peer group brands may be doing. So that's the strategy we are taking with the U.K. In terms of U.K. growth in the U.K. growth is likely to be driven going forward by continued great extension in our products, increasing velocity of change of newness which is around 5,000 new products every single week. So that's range extension and velocity of change of newness and then proposition and customer experience followed by some enhanced marketing on a different level. So in proposition, I mean, better delivery and returns, more options, more payment methods, different user journeys, live visual search. Those sort of things will drive a different level of growth and probably we need to drive on Premier, of course and then we are probably looking at dialing up marketing in a different way in the U.K., which is a different strategy internationally.

George Mensah

Okay. Thank you very much.

Nick Beighton

All right.

Operator

Our next question comes from the line of Adam Cochrane. Please ask your question.

Adam Cochrane

Good morning guys. After that, I think I am European today as well. Well, I will just try and make an English question. Two pieces I am interest in. You talked, I think to John's question. You answered with some of the tech releases and you talked about over 300 in the statement. Is this a sort of a step up and a sustainable step up in terms of the pace of change with which you are operating your business now? And you are going to continue to rapidly make these changes to keep yourself hopefully further ahead of the competition? And then the second question is really on product. When you look at the performance in the year, can you sort of how to think about how the cheaper end of the market has been performing? And then whether there is a scope for ASOS owned label to maybe think abut as price points and try to address some of that cheaper end of the market again, please?

Nick Beighton

Yes. Great question, Adam.

Adam Cochrane

Thank you Nick.

Nick Beighton

Yes. No worries. You remember, I think it was October last year, I did a slide on the importance of velocity of change and velocity in our organization and the step-up in the tech releases is one symptom of that velocity. This year we will do over 1,200 consumer facing tech releases. That's not bug fixes. That's actually consumer facing enhancements. So everyone of those changes improve the lives for our customers and a better experience, better proposition, better journey through the website or improves the lives of our people who are serving our customers.

Is that sustainable change? Yes, it is. You remember some years ago, we were doing something like 120 a year and so 300 in a quarter is massive and I am delighted by that. That's been driven by the change in our architecture, the micro-service architecture. I have talked a lot about the step up in our staff and headcount and the ways of working and the way to go about delivering tech change. So yes, that is sustainable and it needs to be and I want it to go faster.

In terms of the product, it's interesting where you can see at the lower price points, you can see some exciting growth at some of the third-party brands. It's not lost on those. We have to sell all those brands on our website too and we are seeing an awful lot of customers trade into those. They are trading into those without to detriment of ASOS' own brand, I might add. So we just need to have a good think about whether that's an offer we might want to do something with.

Adam Cochrane

Good answer Nick.

Nick Beighton

Thank you Adam. You can come again. All right.

Operator

Our next question comes from the line of Richard Chamberlain. Please ask your question.

Richard Chamberlain

Nice morning Nick.

Nick Beighton

It better be a good question now because Adam has set the bar.

Richard Chamberlain

Well, hopefully at least one is a good question. I am not sure about the others, but we will see. So well, three quick things, if I may. So just going back to the inventory question. I think someone asked it at the start. I think you said at the half-year, you closed with a pretty tight stock position. You have been talking about better stock turn and the Eurohub transition. I just wonder how stock levels are now? Presumably they have been rebuilt to some extent. And then has that had any cost implication to your margin here to rebuild those inventory levels?

Nick Beighton

You tend not to do a massive rebuild of inventory in July. You start to build again around August, which is preparing for autumn and winter. So don't think there has been in a radical step change in stock build since the quarter. That's not true. Our strategy throughout the last couple of years has been tightening our inventory, accelerating our inventory turn, accelerating our newness which has resulted in better sellthrough rates, i.e. full price sales, reduced markdown which has enabled us to maintain a very sensible gross margin trajectory while investing massively in customer pricing and proposition.

Richard Chamberlain

Okay.

Nick Beighton

So what you see today is a continuation of that strategy, but we were particularly tight around supply chain and we did that deliberately because actually going into dramatic supply chain change and not being in control of your stock does lead to disappointment if you got that wrong. I am happy we executed that very cleanly.

Richard Chamberlain

Sure. Okay. Great. Thank you. And just two quick ones, additional ones. Just wondered if you can give an update on expectations for net cash at the year-end or now and also what was the own brand, branded mix in the period given the push into sportswear? Thanks.

Nick Beighton

Okay. So own brand is relatively stable, we said last time around the 40% level and the last 12 months is the first time that we have come up with 50/50 mix through the acceleration of activewear and sportswear through third-party brands predominately. But I already said earlier, we are now ramping up the ASOS version of those which are coming in autumn, winter this year.

In terns of net cash?

Helen Jane Ashton

Net cash, I am expecting to be probably flat year-on-year.

Richard Chamberlain

Probably flat year-on-year. Okay. Okay. Thanks a lot.

Nick Beighton

Thanks Richard.

Operator

Our next question comes from the line of Simon Bowler. Please ask your question.

Nick Beighton

Hi Simon.

Simon Bowler

Good morning. I have three for myself, if that's okay. First two relatively dry. First one, just can you update us on kind of FX gains next year. Can you just give an update on kind of FX translation for this year and if that's different to when you last spoke to, I think, plus 8%. Can give us any sense of what's changed?

Nick Beighton

Well, you are really crackling at the start. Was that what's the FX tailwind into next year, is that?

Simon Bowler

For this year. So I think when you last spoke, it was kind of plus 8%. Just wondering if that's still the case for this year? And if it has change, then what are the moving parts within that?

Nick Beighton

Okay. This year's FX tailwind. Sorry.

Helen Jane Ashton

So at the half, we said that the FX tailwind we are expecting was around about 8% and I said I will keep updating that because obviously that is what the change in spot rates are going to be. Obviously, since the half, we have had some movement in spot rates. So as a result of those impacting my unhedged sales, that's what's changing my FX tailwind. So I am giving you the latest view at the minute but for the full year that I expect the FX tailwind to be circa 6%. But that move is just as a result of the change in spot rates that take in our basically unhedged sales.

Simon Bowler

Okay. Perfect. And then the other two questions. First of all, Russia was kind of spoken about a bit in the first half? Just wondering if you can give us a sense of what's happening, though I know it's a pretty volatile territory? And then secondly, you have kind of indicated that you feel that you left some sales on the table due to kind of the inventory positioning. Can you just kind of shed some light? Did you know that was going to be the case? Did you expect to do that? Or you were more kind of positively surprised by demand levels, which have led you to realize that was the case with hindsight?

Nick Beighton

Okay. In terms of Russia, that's been a continuous standout performer. And yes, it is a volatile territory for obvious reasons, but actually we are seeing sustained triple digit growth in the Russian market throughout the quarter, which has been a feature since June last year. And we followed that with plenty of investment in proposition, free returns, faster delivery and all that good stuff as you expect it to do to just chase that demand down and give a better experience for the Russian customer, but still continues to be very pleased by the Russian performance.

In terms of, did we expect to leave sales on the table with the timing of the stock build going into it? Yes, we did. But that's about preserving the integrity of a major piece of infrastructure.

In terms of, were we positively surprised by some of the things we have learned? Yes. As I was saying to Georgina earlier, those are the things that we didn't expect to see in terms of the move in conversion around turning on the very stock bought for each territory as we went through the transition.

Does that help?

Simon Bowler

That's perfect. Thank you very much, sir.

Nick Beighton

All right Simon. I am not sure we have got many more now. Looking at Greg. One more, I think.

Operator

Okay. Our last question comes from the line of Andrew Porteous. Please ask your question.

Andrew Porteous

Hi guys. You talked a bit before about price inflation in the U.K., but you are holding your prices. Am I right in saying that you are holding own brand, but perhaps there are some branded price increases coming through? And if that is the case, so you are saying your own brand price position therefore improved?

Nick Beighton

Yes. You are absolutely right on both counts.

Andrew Porteous

And therefore are you seeing, should we expect to see your own brand share increase on that basis?

Nick Beighton

Well, I would back that thought process.

Andrew Porteous

Yes. Excellent. Thank you.

Nick Beighton

All right guys. Thank you for the last question. I hope that was useful. Just to conclude, I am really pleased there is strong performance for ASOS, continuing to perform and the quarter has been pretty satisfying considering the things I referred to earlier that we coped during the quarter. We are going to report full-year on October 17. So we will definitely see you all then. Another thing that I really pleased with is, we have continued to innovate at an even faster pace across all areas of our business, from product to technology to proposition. This sets us really well for the future.

I have already talked about over 300 tech releases during the period, which improves the customer experience 300 times or the experience to ASOS staff who are serving our customers. We talked about Apple Pay. We also launched another new Android app and we have got many more features on the block coming that will give you more detail in October. ASOS continues to be in a strong position. Every time we grow, we build our capability, we increase our desirability, we increase our differentiation. We are in a growing channel and we are investing strongly to capture the opportunity ahead of us.

Thanks very much for listening in. Greg's around with Helen, if you have got any follow-up questions. Have a good morning all of you. Cheers.

Operator

That does conclude our conference for today. Thank you for participating. You may all disconnect.