ASOS has agreed terms to dispose of its Lichfield DC to M&S in a significant transaction with net proceeds of £66m, compared to its £266m MCAP. Annual cash cost savings of c£6m suggest this disposal will move ASOS to positive FCF on a proforma basis. We estimate leverage will drop below 1x this year as a result (or to c1.3x including the bond redemption premium). This is clearly a positive development and should be well received. We reiterate buy.
