Proactiveinvestors United Kingdom ASOS plc https://www.proactiveinvestors.co.uk Proactiveinvestors United Kingdom ASOS plc RSS feed en Sun, 16 Jun 2019 14:04:20 +0100 http://blogs.law.harvard.edu/tech/rss Genera CMS action@proactiveinvestors.com (Proactiveinvestors) action@proactiveinvestors.com (Proactiveinvestors) <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190614104235_14111600/ Fri, 14 Jun 2019 10:42:35 +0100 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190614104235_14111600/ <![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190603093002_14095880/ Mon, 03 Jun 2019 09:30:02 +0100 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190603093002_14095880/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190517095140_14078323/ Fri, 17 May 2019 09:51:40 +0100 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190517095140_14078323/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190502095308_14060783/ Thu, 02 May 2019 09:53:08 +0100 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190502095308_14060783/ <![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190501094552_14059101/ Wed, 01 May 2019 09:45:52 +0100 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190501094552_14059101/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190417121852_14044919/ Wed, 17 Apr 2019 12:18:52 +0100 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190417121852_14044919/ <![CDATA[RNS press release - Board Change: CFO Appointment ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190417070004_14043832/ Wed, 17 Apr 2019 07:00:04 +0100 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190417070004_14043832/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190415104636_14041178/ Mon, 15 Apr 2019 10:46:36 +0100 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190415104636_14041178/ <![CDATA[News - ASOS results illustrate the truism that online retailing is all about delivering, as costs jump on warehouse spending ]]> https://www.proactiveinvestors.co.uk/companies/news/218344/asos-results-illustrate-the-truism-that-online-retailing-is-all-about-delivering-as-costs-jump-on-warehouse-spending-218344.html It is a truism that online retailing is all about delivering, and if customers are disappointed because their shopping is delayed, players can get punished, so having efficient warehouses and distribution is crucial.

AIM-listed online fashion giant ASOS plc (LON:ASC) illustrated that lesson the hard way with its first-half results on Wednesday, reporting an 87% drop in its pre-tax profit, largely due to warehouse costs, plus a higher level of discounting, confirming the bad news delivered in a shock profit warning last December.

READ: ASOS firms as it maintains full-year guidance although first-half profits plunge on higher costs

ASOS’s total operating costs jumped by 48.3% in the first half to £635.4mln as the company opened a new warehouse in Atlanta and invested in the automation of its EU hub warehouse in Berlin. Distribution costs accounted for most of the total, rising 15.6% to £204.9mln.

As Russ Mould, investment director at AJ Bell pointed out: “The retailer’s profit has gone up in smoke after suffering hefty costs largely linked to investment in warehousing. However, the company had already warned about trading being affected by heavy discounting and fulfilment issues in the US so seeing the earnings decline in print shouldn’t be a surprise.”

He added: “The important point from today’s announcement is that life hasn’t got any worse with ASOS maintaining its 2019 earnings and spending guidance. That will come as a relief to the market.”

But, Mould continued: “The pressure is on for ASOS to sustain its reputation of fast growth and management will be hoping that the current hiccups will go away without any more shocks.”

US warehouse issues down to staffing

ASOS reported that US-billed sales increased by 80% year-on-year in the early days of its Atlanta warehouse coming on stream, which was an encouraging start before staff were overwhelmed by the volumes.

The group said Atlanta is now operational, with ASOS able to start offering improved delivery, including next day to some territories.

City Index analyst Fiona Cincotta commented: “ASOS had already announced last month that it was unable to cope with an unexpected surge in demand at its new US business.

“Today, management has revealed that the issue was related to a staffing shortage, rather limited technical capabilities.”

She added: “ASOS has since nearly doubled staff levels at its Atlanta warehouse to 1,532 but not before its customers were subjected to a four-day delay on their deliveries.

Cincotta also concluded that: “Online retailing is hyper-competitive and any more hiccups like this will be hard to forgive."

People simply spending less

Meanwhile, the challenges for bricks and mortar high street retailers were very much in focus again this week with the collapse into administration of department stores operator Debenhams PLC, however, an example of the similar pressures weighing on their online peers was provided by ASOS after its shock profit warning in December.

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown pointed out: “The downgrading of full-year guidance came as a surprise, as struggling high street shops put their strife down to the rise of online shopping, and ASOS is struggling to meet that demand in some markets.”

“But,” she added, “the company’s current predicament shows people are simply spending less on goods, be it in physical or virtual shops.”

Lund-Yates continued: “However drastic today’s numbers may seem though, ASOS should now be on the right track, after what’s been a tumultuous transition period.

“With spending due to stabilise in the coming year, and the group having a better handle on its fledgling international distribution set-ups, light is now visible at the end of the tunnel.

“ASOS is still very much a growth story, and its vast customer base, and growing international proposition mean it should be able to prosper from here on in.”

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Wed, 10 Apr 2019 15:51:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/218344/asos-results-illustrate-the-truism-that-online-retailing-is-all-about-delivering-as-costs-jump-on-warehouse-spending-218344.html
<![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190410103427_14036001/ Wed, 10 Apr 2019 10:34:27 +0100 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190410103427_14036001/ <![CDATA[News - ASOS shares firm as it maintains full-year guidance although first-half profits plunge on higher costs ]]> https://www.proactiveinvestors.co.uk/companies/news/218294/asos-shares-firm-as-it-maintains-full-year-guidance-although-first-half-profits-plunge-on-higher-costs-218294.html ASOS PLC (LON:ASC) shares advanced on Wednesday after the AIM giant maintained its full-year guidance despite reporting an 87% drop in first-half pre-tax profit, largely due to warehouse costs and a higher level of discounting.

The online fashion retailer, which issued a shock profit warning in December after weak sales over Black Friday and the run-up to Christmas, said pre-tax profit fell to £4mln in the six months to February 28 from £29.9mln a year ago.

READ: ASOS shares slump on profit warning as it succumbs to challenging retail market

Retail gross margins fell 60 basis points (bps) to 47.4% as the company cut prices to draw in customers in a challenging UK retail market.

Total operating costs jumped 48.3% to £635.4mln as the company opened a new warehouse in Atlanta and invested in the automation of its EU hub warehouse in Berlin. Distribution costs accounted for most of the total, rising 15.6% to £204.9mln. 

Operating costs to revenue increased by 170bps to 48.3%.

Group revenue increased 14% to £1.31bn with retail sales up 13% to £1.28bn.

UK retail sales gained 16% to £481.5mln and international retail sales rose 12% to £799mln.

ASOS expects performance to improve in second half

“ASOS is capable of a lot more,” said chief executive Nick Beighton.

“We have identified a number of things we can do better and are taking action accordingly.

“We are confident of an improved performance in the second half and are not changing our guidance for the year.”

ASOS spent £103.2mln on improving its technology platforms and automating warehouses to increase efficiency and save costs down the line.

The aim is to reduce warehouse costs to 8% of revenue.

ASOS expects the automation of its Euro Hub warehouse to go live later this month.

ASOS sees return to positive free cash flow in 2020

Capital expenditure is estimated to total £200mln in 2019, as previously announced, and will fall to £150mln in 2020. 

“Looking to the medium term, with this phase of our capital investment in our warehouses and transformation technology nearing completion, we are confident in our ability to continue to capture market share globally, allowing us to maintain top-line performance, restore EBIT margin and accelerate positive free cash flow,” the group said.

The retailer continues to expect sales growth of 15% for the year and an underlying margin of 2%. Net debt is estimated to reach £50mln in 2019 and ASOS sees a return to positive free cash flow in 2020. 

In December, ASOS cut its sales growth guidance for the year from 20-25% and halved its underlying margin forecast. 

Shares rose 5.8% to 3,330p in morning trading. 

Liberum hikes target price 

Liberum maintained a 'hold' rating and raised its target price to 3,200p from 2,800p.

"Key actions management is taking to support an improved performance going forward is not without execution risk," the broker said.

"We increase our TP to reflect the better cash but maintain our HOLD rating given execution risk going forward, preferring a switch from ASOS into Zalando.

In afternoon trading, ASOS shares were up 7.3% to 3,379p. albeit easing back from a session peak of 3,673p.

 -- Adds share price --.

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Wed, 10 Apr 2019 07:44:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/218294/asos-shares-firm-as-it-maintains-full-year-guidance-although-first-half-profits-plunge-on-higher-costs-218294.html
<![CDATA[RNS press release - Interim Results ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190410070002_14035105/ Wed, 10 Apr 2019 07:00:02 +0100 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190410070002_14035105/ <![CDATA[News - Another shock on the cards for ASOS investors in Wednesday’s interim results? ]]> https://www.proactiveinvestors.co.uk/companies/news/218251/another-shock-on-the-cards-for-asos-investors-in-wednesdays-interim-results-218251.html ASOS plc (LON:ASC) will be looking to Wednesday’s interim results with a sense of trepidation after a report in the Sunday Times over the weekend suggested half-year profits were set to plunge.

The paper claimed that the consensus among City analysts was for a pre-tax profit of £3.2mln for the six months to the end of February, almost 90% down on the £29.9mln it posted a year earlier.

READ: ASOS shares dive as millenials react with horror to returns changes

The fast fashion retailer, popular among twentysomethings, has already warned the market that sales and profits will be well below previous expectations.

After a horrible Black Friday and “challenging” run-up to Christmas, bosses cut their sales growth guidance for the year to 15% (from 20-25%), while they also halved their underlying margin forecast to 2%.

Last month’s trading update seemed to reassure investors, with sales growth in the UK – its largest market – holding steady at 14%, and no repeat of December’s shock profit warning.

There were a couple of issues though, primarily across the pond. The US is arguably the company’s biggest growth driver given it is a relatively untapped market, home to more than 300mln people.

US performance eyed

ASOS has historically fulfilled any US orders at its UK warehouse, but it opened a new facility in Atlanta, Georgia earlier this year as it looks to accelerate its stateside expansion.

But the company, one of the biggest on AIM, misjudged the level of demand the new warehouse would experience which led to a huge backlog of orders. Investors will be keen to see a pick-up in US now that those teething issues are in the past.

The plan longer-term is to get margins back up to 4%, so the market will be looking for bosses to outline how they plan to do this.

The recent changes to the returns policy, which aims to stop people buying clothes, wearing them once and then sending them back, should help in this regard.

ASOS shares were down 0.5% to 3,074p on Tuesday afternoon.

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Tue, 09 Apr 2019 15:00:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/218251/another-shock-on-the-cards-for-asos-investors-in-wednesdays-interim-results-218251.html
<![CDATA[News - ASOS shares dive as millennials react with horror to returns policy changes ]]> https://www.proactiveinvestors.co.uk/companies/news/217984/asos-shares-dive-as-millennials-react-with-horror-to-returns-policy-changes-217984.html ASOS PLC (LON:ASC) shares dropped on Thursday after the online fashion giant changed its returns policy, much to the horror of Youtubers and Instagram ‘influencers’.

In an email to its customers, the £3bn company said it would close down any accounts where it had detected “unusual patterns of return activity.”

“[If] we suspect someone is actually wearing their purchases and then returning them or ordering and returning loads – way, waaay more than even the most loyal ASOS customer would order – then we might have to deactivate the account and any associated accounts.”

The news seemed to scare shoppers, with some vowing to hold back their orders for fear of being singled out.

Yeah, I know! I've seen quite a few bloggers that have had their accounts deleted too, so this is definitely not giving out a good message. Think I'll stick to shopping directly with brands.

— Laura (@life_lipstick) April 4, 2019

ASOS is changing its return policy and has clocked all the YouTubers doing hauls each week and returning everything pic.twitter.com/30Icwm7gnl

— Meg (@MegVClark) April 4, 2019

ASOS sugar-coating what will be a bitter pill for some. They're extending the returns window to 45 days (a move of limited interest to most) whilst - the real message is - they're cracking down on people who order stuff, wear it once and return it. Fair play. pic.twitter.com/gHfZBSSmNa

— katerina. (@kateiscuban) April 3, 2019

@ASOS
I’m really put off ordering after getting that weird email about unusual returns. If your premier service is causing you problems then get rid of it.dont make me feel nervous about ordering a size 4 and a 3 to see what fits

— Dr Ms Bumble ramone (@ExploitedRamone) April 4, 2019

Barclaycard carried out a survey of 2,000 people last summer which found that almost one in ten UK shoppers admitted buying clothes to wear once with the sole aim of posting a photo to social media before returning their purchases shortly after.

This type of activity, which Barclaycard called a “hashtag moment”, is what ASOS wants to clamp down on.

“Returns are [an] enormous part of the cost of doing business in [the online fashion] sector and hence profitability,” said Shore Cap analyst Clive Black, who estimated that as much as a third of all online purchases are returned.

According to data collated by global returns management platform ReBOUND, the cost of returns to UK retailers between Black Friday and Christmas Day last year was £2.4bn.

ASOS, which is due to publish its interim results on Wednesday, saw its shares fall 4% to 3,176p on Thursday.

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Thu, 04 Apr 2019 15:00:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/217984/asos-shares-dive-as-millennials-react-with-horror-to-returns-policy-changes-217984.html
<![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190401095151_14023210/ Mon, 01 Apr 2019 09:51:51 +0100 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190401095151_14023210/ <![CDATA[News - What went wrong with ASOS’s US business last month? ]]> https://www.proactiveinvestors.co.uk/companies/news/216756/what-went-wrong-with-asoss-us-business-last-month-216756.html With growth beginning to moderate in ASOS PLC’s (LON:ASC) biggest and most mature market – the UK – bosses, and indeed investors, have been turning their attention to expansion abroad.

One of those key overseas markets is the US. As is the case with British pop bands, cracking the US is just as important for UK companies as its sheer size and wealth make it potentially very lucrative.

READ: ASOS repeats FY guidance despite US and Europe troubles

ASOS has had a presence across the pond since 2012, but most of its orders from American customers were processed from the firm’s giant warehouse in Barnsley.

But shipping t-shirts and trainers to far-flung destinations such as Los Angeles and having to deal with returns from those places was costly and time-consuming, so in 2016, ASOS announced it was to build a huge new distribution centre in Atlanta.

The warehouse cost US$40mln to fit out and started to handle US orders in the second half of last year, before going fully online in February.

Too many orders to fulfil

But soon after shifting all of its US distribution to Atlanta, it became clear to bosses that they needed far more than the 700 warehouse workers they had hired.

“The logistical and software solution was not a problem, but 700 people could not cope with the level of demand experienced,” explains City broker Liberum.

“The uplift in demand seen after three days was so great that marketing had to be suspended.”

It’s not often that companies actively try to discourage sales, but analysts reckon the number of orders coming through was 3-4 times more than the company had forecast.

Peel Hunt says: “The net result was that the warehouse ground to a halt, deliveries were switched back to Barnsley and the backlog took four weeks to clear.”

‘Highlights US potential’

While that is a reminder of the demand and execution challenges still facing ASOS, some in the City are looking on the bright side now that Atlanta is back up-and-running.

“Short-term warehouse disruption on change is par for the course, in our view, but the initial demand spike highlights the potential ASOS in the US market,” added Peel Hunt. “We see accelerating growth into H2 and into 2020.”

Chief executive Nick Beighton echoed those thoughts that the surge in demand was “very encouraging” for the future.

But Fiona Cincotta, senior market analyst at City Index, cautioned: “Management is right when the say the demand surge in the US is a silver lining, but that demand won't linger for long if the company keeps failing to deliver.”

ASOS shares were down 9.8% to 2,900p in late-morning trading on Tuesday.

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Tue, 19 Mar 2019 12:00:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/216756/what-went-wrong-with-asoss-us-business-last-month-216756.html
<![CDATA[News - ASOS stumbles again as teething troubles at new Atlanta warehouse knock US sales ]]> https://www.proactiveinvestors.co.uk/companies/news/216720/asos-stumbles-again-as-teething-troubles-at-new-atlanta-warehouse-knock-us-sales-216720.html ASOS PLC (LON:ASC) is adamant it remains on track to hit recently-revised full-year targets despite a drop-off in US sales and “challenging” conditions in the online fashion retailer’s two biggest European markets.

Total retail sales climbed 11% to £1.28bn in the six months ended 28 February (H1 18: £1.13bn) as shoppers placed 17.3mln orders – a year-on-year increase of 15%.

READ: ASOS’s Christmas sell-off was overdone, says RBC

Sales in the UK – ASOS’s largest market – climbed 16% to £481.5mln in the first half (H1 18: £414.5mln).

But growth in Europe slowed sharply, with sales up 10% compared to the same period last year to £402.2mln (H1 18: £349.1mln).

To put that into context, at the halfway stage of 2018, sales had soared by 40%. Bosses said the slowdown this time around was due to “challenging” conditions in France and Germany.

US ‘behind plans’

US sales edged 4% higher in the six-month period to £161.6mln (H1 18: £149.0mln), while they fell over December and into the new year as ASOS’s new warehouse in Atlanta struggled to keep up with demand.

Rest of world growth slowed as well, with sales climbing 9% to £236.0mln (H1 18: £218.7mln), although they have picked up again in recent weeks.

A host of other metrics didn’t make for good reading either: Average selling prices fell 1% year-on-year and the average basket value dropped 2%.

Gross margin edged 40 basis points higher during the period, while order frequency and active customers also rose.

Guidance maintained

ASOS repeated the expectations which it reset in December’s shock profit warning following “a significant deterioration” in November trading.

For the year, it is still forecasting sales growth of 15% and a 150 basis point fall in gross margins as it cuts prices, particularly in France and Germany, to try to boost the top line.

As for capital expenditure, that is also expected to remain at around the £200mln mark and net debt come the year-end, should sit at around £50mln.

Things picking up after ‘disappointing Q1’

“Our US performance was behind our plans during the period,” admitted chief executive Nick Beighton.

“As our Atlanta warehouse went fully online, demand far exceeded our expectations. Whilst very encouraging for the longer term, this caused a significant short-term despatch backlog which we have now cleared.

“These delayed shipments will be recognised in P3 and US trading is now regaining momentum. Our ROW segment returned to good growth of 20% after a disappointing Q1.”

Beighton, who has been CEO since 2015, added: “We will be increasing investment in price and marketing in the second half, particularly in France and Germany.

“Given the actions we are taking together with an improving US performance, we believe the group will deliver stronger growth in the second half. Consequently, we remain confident that we will meet guidance for the full year.”

Shares were down 9.3% to 2,917p in early afternoon trading.

-- Adds share price --

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Tue, 19 Mar 2019 07:44:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/216720/asos-stumbles-again-as-teething-troubles-at-new-atlanta-warehouse-knock-us-sales-216720.html
<![CDATA[RNS press release - Trading Statement ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190319070007_14006587/ Tue, 19 Mar 2019 07:00:07 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190319070007_14006587/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190306094524_13992143/ Wed, 06 Mar 2019 09:45:24 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190306094524_13992143/ <![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190301103642_13987233/ Fri, 01 Mar 2019 10:36:42 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190301103642_13987233/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190215100050_13971002/ Fri, 15 Feb 2019 10:00:50 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190215100050_13971002/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190208114407_13963545/ Fri, 08 Feb 2019 11:44:07 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190208114407_13963545/ <![CDATA[News - ASOS’ Christmas sell-off was overdone, says RBC, as it lifts fashion retailer's price target ]]> https://www.proactiveinvestors.co.uk/companies/news/213811/asos-christmas-sell-off-was-overdone-says-rbc-as-it-lifts-fashion-retailer-s-price-target-213811.html Online clothes seller ASOS PLC (LON:ASC) looks cheap, according to the retail buffs at RBC Capital.

ASOS shares tanked at the end of 2018 as its seeming immunity to the waning confidence of UK shoppers amid an uncertain economic backdrop expired.

READ: ASOS slumps on profit warning

The fashion retailer slashed its full-year forecasts after warning that it had seen an “indicant deterioration” in sales in November, while unseasonably warm weather had knocked demand for its winter ranges.

Within a matter of days, the share price had halved from around 4,200p to just above 2,100p, wiping more than £1bn from its market capitalisation.

RBC cut its price target and removed ASOS from its ‘Top Pick’ list in the wake of that profit warning.

“[The downgrade was] mainly because of the macro uncertainty that has increased rather than a change in our view on the company’s relative positioning and ability to take market share,” read a brief research note on Friday.

“The industry backdrop significantly deteriorated in 2018, and despite its structural tailwinds, ASOS is evidently not immune.”

Target priced hiked to £36

But analysts reckon the sell-off has been too harsh which provides investors with an “opportunity” to get in on the cheap, even with the stock recovering over the past few weeks.

“We continue to believe that its industry-leading proposition and pace of innovation will enable ASOS to continue taking share in its large addressable market,” they added.

“Having assessed the risk/reward, we are still compelled by the opportunity the current share price creates.”

RBC repeated its ‘outperform’ rating for ASOS as it hiked its price target up to 3,600 from 3,200p previously.

ASOS shares were unmoved by the price target increase, with shares broadly flat at 3,290p.

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Fri, 01 Feb 2019 12:11:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/213811/asos-christmas-sell-off-was-overdone-says-rbc-as-it-lifts-fashion-retailer-s-price-target-213811.html
<![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190201101815_13955291/ Fri, 01 Feb 2019 10:18:15 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190201101815_13955291/ <![CDATA[RNS press release - Notification of first half trading update ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190129123323_13950552/ Tue, 29 Jan 2019 12:33:23 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190129123323_13950552/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190124090122_13945389/ Thu, 24 Jan 2019 09:01:22 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190124090122_13945389/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190114105242_13933667/ Mon, 14 Jan 2019 10:52:42 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190114105242_13933667/ <![CDATA[RNS press release - Holding(s) in Company - replacement ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190108100449_13927381/ Tue, 08 Jan 2019 10:04:49 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190108100449_13927381/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190107172044_13926475/ Mon, 07 Jan 2019 17:20:44 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190107172044_13926475/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190107101416_13925781/ Mon, 07 Jan 2019 10:14:16 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190107101416_13925781/ <![CDATA[News - ASOS tipped to lift full-year guidance next month as City broker reinstates ‘buy’ recommendation ]]> https://www.proactiveinvestors.co.uk/companies/news/211901/asos-tipped-to-lift-full-year-guidance-next-month-as-city-broker-reinstates-buy-recommendation-211901.html Analysts at Peel Hunt have reinstated their ‘buy’ recommendation for ASOS plc (LON:ASC), claiming that the online fashion retailer’s plunge in December has thrown up a “rare buying opportunity”.

Last month, the one-time ‘King of AIM’ lost its crown when it issued a shock profit warning, telling the market that it had seen a “significant deterioration” in trading in November.

READ: ASOS slumps on shock profit warning

It also blamed an unseasonably warm start to winter and heavy discounting for the warning, which resulted in more than 50% being wiped from its value.

Peel Hunt thinks the real issue was management’s cock-up with Black Friday – an increasingly important time for online retailers.

“We believe ASOS misjudged the impact of exceptional levels of discount activity across the market and failed to create a compelling enough campaign for customers, who were shopping at 50-70% discounts elsewhere,” read a note to clients.

It reckons trading picked up again in the build-up to Christmas and New Year which should see it reverse last month’s guidance cut in its upcoming trading update.

Guidance to be lifted next month?

“Trading misstep aside, ASOS remains the go-to platform for young fashion, offering significant medium-term growth prospects across the US, Europe, UK and wider global markets.

“We look for February’s trading update confirm that sales performance is above revised full-year guidance of 15% group revenue growth.”

ASOS shares are up 6.4% to 2,521p on Thursday morning which is still some way short of Peel Hunt’s price target of 4,000p. This time last year, the stock was changing hands for more than 7,600p.

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Thu, 03 Jan 2019 10:21:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/211901/asos-tipped-to-lift-full-year-guidance-next-month-as-city-broker-reinstates-buy-recommendation-211901.html
<![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190102103032_13920796/ Wed, 02 Jan 2019 10:30:32 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20190102103032_13920796/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181219153604_13910226/ Wed, 19 Dec 2018 15:36:04 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181219153604_13910226/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181219141132_13910009/ Wed, 19 Dec 2018 14:11:32 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181219141132_13910009/ <![CDATA[News - RBC downgrades ASOS to ‘Outperform’ from ‘Top Pick’ and slashes target price amid “heightened” macro risk ]]> https://www.proactiveinvestors.co.uk/companies/news/211486/rbc-downgrades-asos-to-outperform-from-top-pick-and-slashes-target-price-amid-heightened-macro-risk-211486.html ASOS plc (LON:ASC) has been downgraded to ‘Outperform’ from ‘Top Pick’ by RBC, which also slashed its target price saying it had “underestimated ASOS's vulnerability to a more promotional market”.

The Canadian bank cut its target on the stock by more than 50% to 3,200p from 7,700p having also reduced its estimates by between 55% and 60% to reflect “the new reality”.

READ: ASOS shares slump on profit warning as it succumbs to challenging retail market

“The industry backdrop has significantly deteriorated in 2019, and despite its structural tailwinds, ASOS is evidently not immune. However, we continue to believe that its industry-leading proposition…and pace of innovation will enable ASOS to continue taking share in its large addressable market.”

The bank added that there was also a mergers & acquisitions risk to ASOS, viewing it as “a potential take-out candidate” as it believed “the challenges within the retail sector” and “high barriers to success in the internet” were likely to drive greater consolidation in the longer term.

The downgrade followed a bloodbath for ASOS’s shares on Monday after a profit warning sent the online retailer’s shares plunging around 38%.

The company said it has seen a “significant deterioration” in trading in November – a key month for the group – while increased discounting and unseasonably warm weather over the past three months reduced its average selling price.

The group added that challenging market conditions had led to the weakest growth in online clothing sales in recent years.

In mid-morning trading Wednesday, ASOS shares were down 5.6% at 2,454p.

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Wed, 19 Dec 2018 10:51:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/211486/rbc-downgrades-asos-to-outperform-from-top-pick-and-slashes-target-price-amid-heightened-macro-risk-211486.html
<![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181218130713_13908151/ Tue, 18 Dec 2018 13:07:13 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181218130713_13908151/ <![CDATA[News - Is it time to buy ASOS? Analysts at Barclays and Credit Suisse think so ]]> https://www.proactiveinvestors.co.uk/companies/news/211402/is-it-time-to-buy-asos-analysts-at-barclays-and-credit-suisse-think-so-211402.html ASOS plc (LON:ASC) shares clawed back gains on Tuesday as analysts at Credit Suisse and Barclays recommended investors take advantage of the online fashion retailer’s cheaper valuation after its shock profit warning.

The company lost about 40% of its value on Monday after it cut its full-year guidance, blaming economic uncertainty and weaker consumer confidence.

READ: ASOS shares slump on profit warning as it succumbs to challenging retail market

ASOS said it had seen a “significant deterioration” in trading in November – a key month for the group – while increased discounting and unseasonably warm weather over the past three months reduced its average selling price.

However, analysts at Credit Suisse upgraded their recommendation on the stock while Barclays maintained a positive stance as they see the decline in the share price as an opportunity.

ASOS still a long-term winner, says Credit Suisse

Credit Suisse raised its rating to ‘outperform’ from ‘neutral’ but cut its target price to 3,500p from 6,000p, saying it thinks ASOS is “still a long-term winner”.

“Following yesterday’s profit warning, the shares have now fallen 66% from the year’s high and the while near term sales and margins are unpredictable, the key considerations are does it have a business model with medium-term potential to grow and generate cash?"

“We believe this is the case and, at the risk of catching a falling knife, upgrade Asos to ‘outperform’ for the first time with a 12m forward target price of 3,500p (vs 6,000p).”

The broker said it sees scope for ASOS to cut costs to offset its weaker sales performance. With a new chairman and chief financial officer on board, Credit Suisse reckons there could be an opportunity to take at least 1-2% out of operating expenditure.

ASOS appointed former ITV and Royal Mail boss Adam Crozier as its chairman to replace Brian McBride in November, while former Britvic finance chief Mathew Dunn will begin as chief financial officer next spring.

Barclays expects ASOS to recover in 2020

Barclays kept an ‘overweight’ rating on the stock but reduced its target price to 4,000p from 7,500p, saying it continues to believe the company’s business model is differentiated and the numbers will improve in the long term.

“Our discounted cash flow no longer assumes a return to 20-25% top line and has a 5% EBIT margin in the mid 2030s. Yet it has more than 50% upside,” the bank said.

The bank said current trading at ASOS was much worse than thought and the profit warning had “caught us out”.

Barclays said most of the company’s issues were due to a tough UK retail market but less so in Germany and France where ASOS said trading conditions have become more challenging. 

“On top, ASOS has got the Black Friday strategy ‘wrong’ so there is some execution at play,” the bank said.

“E-commerce is becoming less immune to wider retail pain as it grows, and that is a concern. But it isn’t structurally thesis-changing - ASOS remains a long term winner in our view.”

Barclays cut earnings per share forecast for fiscal year 2019 by 61% to 27p and expects a modest recovery in 2020 to 91p, although that marks a 38% reduction to its previous estimate.

UBS and ShoreCap put recommendation under review, Liberum downgrades rating

UBS and Shore Capital placed their rating and target price under review following the profit warning.

Liberum turned more cautious, downgrading its recommendation to ‘hold’ from ‘buy’ and lowering its target price to 2,800p from 8,000p.

“We lower our 2019 EPS forecast by 54%, with a flow through to outer years due to (i) lower sales growth, (ii) lower retail gross margins, and (iii) a halving of 2019EBIT margin from 4% to 2%,” it said.

The broker added: “There is still significant value in ASOS’s existing customer base, which suggests an intrinsic value for ASOS that is higher than its current enterprise value, but with earnings visibility much lower, important questions still to answer and shorter-term catalysts lacking, we move to ‘hold’.”.

In late morning trading, shares rose 4.2% to 2,726p.

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Tue, 18 Dec 2018 11:46:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/211402/is-it-time-to-buy-asos-analysts-at-barclays-and-credit-suisse-think-so-211402.html
<![CDATA[News - ASOS rout puts paid to online resilience against retail weakness ]]> https://www.proactiveinvestors.co.uk/companies/news/211325/asos-rout-puts-paid-to-online-resilience-against-retail-weakness-211325.html The plunge in the share price of clothing retailer ASOS plc (LON:ASC) seems to have brought home the fact that the online retail market isn’t immune to the slump engulfing the sector.

The company took a battering on Monday morning after it downgraded its forecasts for the full year amid a slump in sales growth.

READ: ASOS shares slump on profit warning as it succumbs to challenging retail market

The contagion soon spread to fellow online clothing seller Boohoo Group PLC (LON:BOO), which saw its own shares nosedive despite a swift attempt to reassure shareholders that trading was continuing as expected.

READ: Boohoo shares slide as it seeks to reassure investors amid ASOS profit warning

Given the arrival of the all-important Christmas period, many are steeling themselves against what could be a bloodbath in the new year as a slew of Christmas updates will present themselves.

“All of this is adding up to a very rough Christmas and potential carnage for the high street,” said Neil Wilson, chief market analyst at Markets.com.

“If Asos is finding it tough out there, then just about every retail stock has a problem. We knew the high street was struggling due to structural shifts, but Asos slashing guidance suggests things are even worse in the run-up to Christmas than previously thought for the sector and the strife extends well beyond the high street”.

Consumer confidence wane not confined to weak footfall

While the high street woes have been blamed on the burden of store portfolios as well as rising wage costs, the online afflictions seem to show that discounting and the unusual weather conditions in 2018 have also had a significant impact, factors which the online market is just as exposed to.

The performances also indicate that weaker footfall is not the only consumer behaviour declining, with general confidence also falling.

“Recent data revealed a huge decline in UK retail footfall, which it would have been easy to assume was due to online players taking share at a faster rate. These numbers show it’s more complicated and more worrying than that. It looks like consumer confidence has been knocked to the extent people aren’t spending much anywhere, be it in physical stores or online” said George Salmon, equity analyst at Hargreaves Lansdown.

Salmon added that Brexit uncertainty could also have impacted ASOS harder due to its younger demographic having “more concerns over the future of the economy post-Brexit than their parents”.

Trouble for online portals?

The difficulties online may also cause concern for struggling high street retailers, who were banking on their online portals rescuing them from declining sales.

READ: Next shares slip as sales at retail stores fall further in third quarter

One example is Next PLC (LON:NXT), which has been shifting more of its strategy toward online sales this year and seen some success with a 12.5% increase in online sales in its third-quarter results.

Institutions take a beating

ASOS’s underperformance also means Christmas will herald bad news for a number of prominent institutional investors who will be suffering from the share plunge.

One that will be feeling particularly acute pain is Danish clothing firm Bestseller, which is the firm’s largest shareholder with a 26.6% stake that today fell in value from around £933mln last Friday to £562mln on Monday morning.

“Quiet to average” Christmas ahead, says broker as “tidal wave” crashes into the sector

Christmas also looks unlikely to bring any festive cheer, with a “quiet to average” period expected by Peel Hunt analyst Jonathan Pritchard.

“It always works as a microcosm for who is communicating well and relevant to their customers,” Pritchard said, adding that there was “a tidal wave” crashing into the sector that will mean “a few boats will get sunk”.

“It’s the companies that have the good relationships with the consumer that will do best”.

In lunchtime trading Monday, ASOS shares were down 40% at 2,498p while Boohoo shares were down 15% at 155.6p.

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Mon, 17 Dec 2018 11:40:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/211325/asos-rout-puts-paid-to-online-resilience-against-retail-weakness-211325.html
<![CDATA[Media files - Markets.com's Neil Wilson on shock profit warning from ASOS ]]> https://www.proactiveinvestors.co.uk/companies/stocktube/11637/marketscom-s-neil-wilson-on-shock-profit-warning-from-asos-11637.html Mon, 17 Dec 2018 10:34:00 +0000 https://www.proactiveinvestors.co.uk/companies/stocktube/11637/marketscom-s-neil-wilson-on-shock-profit-warning-from-asos-11637.html <![CDATA[News - ASOS shares slump on profit warning as it succumbs to challenging retail market ]]> https://www.proactiveinvestors.co.uk/companies/news/211312/asos-shares-slump-on-profit-warning-as-it-succumbs-to-challenging-retail-market-211312.html Online fashion retailer ASOS plc (LON:ASC) shares plunged more than 35% as it issued a profit warning, blaming economic uncertainty and weaker consumer confidence.  

The company said it has seen a “significant deterioration” in trading in November – a key month for the group – while increased discounting and unseasonably warm weather over the past three months reduced its average selling price.

The group added that challenging market conditions had led to the weakest growth in online clothing sales in recent years.

“As a result, we have reduced our expectations for the current financial year,” ASOS said. 

ASOS now expects sales to increase 15% for the year to August 2019, compared to its previous forecast of 20-25%. The group also revised down its earnings (EBIT) margin to 2% from 3%. Gross margins are seen 150bps lower, against previous guidance for margins to be flat at 49.9%.

READ: ASOS is burning cash, Morgan Stanley says as it slashes target price

"Whilst trading in September and October was broadly in line with our expectations, November, a very material month for us from both a sales and cash margin perspective, was significantly behind expectations," ASOS said.

"There has been a high level of discounting and promotional activity across the market. We have increased our own level of promotional activity, leading to a higher discount and continued high clearance mix."

ASOS cuts spending commitments 

In response to difficult trading, the group has reduced its capital expenditure for the year to £200mln.

 ASOS said it has "significant headroom" in its existing banking facilities and continues to expect it will return to a free cash flow positive position in 2020. 

In the three months to November 30, total revenue rose to £656mln from £576.7mln a year ago with UK retail sales up 19%, European Union sales up 18%, US retail sales up 13% and international sales up 11%, offsetting a 3% drop in the rest of the world. 

However, the gross margin fell 160 basis points, hit by increased promotional activity. 

In lunchtime trading, shares were trading hands at 2,473p. 

ASOS profit warning spells trouble for rest of the sector, says analyst

“If Asos is finding it tough out there, then just about every retail stock has a problem," said Neil Wilson, chief market analyst at Markets.com.

"We knew the high street was struggling due to structural shifts, but Asos slashing guidance suggests things are even worse in the run-up to Christmas than previously thought for the sector and the strife extends well beyond the high street."

--Adds analyst interview and updates share price--

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Mon, 17 Dec 2018 08:38:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/211312/asos-shares-slump-on-profit-warning-as-it-succumbs-to-challenging-retail-market-211312.html
<![CDATA[RNS press release - Trading Update ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181217070005_13905280/ Mon, 17 Dec 2018 07:00:05 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181217070005_13905280/ <![CDATA[News - ASOS is burning cash, Morgan Stanley says as it slashes target price ]]> https://www.proactiveinvestors.co.uk/companies/news/210956/asos-is-burning-cash-morgan-stanley-says-as-it-slashes-target-price-210956.html ASOS plc (LON:ASC) could find itself uncomfortably tight on liquidity ahead of peak trading, Morgan Stanley said as it maintained an ‘underweight’ rating and slashed its target price to 3,200p from 5,000p.

Morgan Stanley said the online fashion retailer is burning cash, having spent £400mln on capital expenditure in the last two years – more than the previous 15 years put together.

READ: ASOS jumps as full-year profit narrowly tops forecasts, online retailer maintains current year guidance

“ASOS had £173mln of net cash on its balance sheet in September 2016. However, it burned through £13mln in fiscal year 2016/17 and a further £117mln in fiscal year 2017/18, leaving it with just £43mln of cash in September 2018.”

The investment bank said ASOS has sufficient liquidity for the near future after increasing its borrowing facility to £150mln but expects £90mln of net debt in August 2020 when the company could find itself could find itself “uncomfortably tight” on liquidity ahead of peak trading.

“Unless cash flows improve, it may have to scale back its spending and growth ambitions,” Morgan Stanley said.

Morgan Stanley lowered its earnings forecasts by 7-17% over the next three years on higher depreciation and amortisation costs, meaning it sits 26% below consensus forecasts by fiscal year 2020/21. It said margins need to increase to 8% in 2020/21 for ASOS to meet its medium-term target but given the historical margin trajectory, “that feels demanding”.

“We now assume EBITDA margins expand 50 basis points to 7.6% by the terminal year (previous estimate 200 basis points to 9.1%) contributing circa 75% of our price target revision.

“Combined with higher capex and tighter working capital we now expect £170mln cash outflow through FY2020/21 (previous £100mln inflow).”

In mid-morning trading, shares fell 6.4% to 4,215p. 

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Tue, 11 Dec 2018 10:30:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/210956/asos-is-burning-cash-morgan-stanley-says-as-it-slashes-target-price-210956.html
<![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181203100839_13888747/ Mon, 03 Dec 2018 10:08:39 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181203100839_13888747/ <![CDATA[RNS press release - Result of AGM ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181129130022_13885545/ Thu, 29 Nov 2018 13:00:22 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181129130022_13885545/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181101160338_13852099/ Thu, 01 Nov 2018 16:03:38 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181101160338_13852099/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181101130002_13851751/ Thu, 01 Nov 2018 13:00:02 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181101130002_13851751/ <![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181101094555_13851123/ Thu, 01 Nov 2018 09:45:55 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181101094555_13851123/ <![CDATA[RNS press release - Additional Listing ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181029140439_13846294/ Mon, 29 Oct 2018 14:04:39 +0000 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181029140439_13846294/ <![CDATA[RNS press release - Notice of AGM and Annual Report & Accounts ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181026114705_13844301/ Fri, 26 Oct 2018 11:47:05 +0100 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181026114705_13844301/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181024132714_13840980/ Wed, 24 Oct 2018 13:27:14 +0100 https://www.proactiveinvestors.co.uk/companies/rns/89/LSE20181024132714_13840980/