Analysts at Shore Capital think that news of the departure of ASOS PLC's (LSE:ASC) interim CFO is: “Another jump (off a sinking ship)”.
The online fashion retailer announced Friday that its interim CFO Katy Mecklenburgh will step down. This follows predecessor Mat Dunn’s resignation on 31 October this year.
Set to join IT company Softcat in the same role, Mecklenburgh will see out her notice period of 6 months whilst the company search for her replacement.
The ShoreCap analysts noted: "This follows the news on Thursday that the company has quietly loosened performance targets for the annual executive bonus. The weighting for revenue in the current year has been cut from 30% to 15%. Adjusted pre-tax profit has decreased from 30% to 25%, while adjusted cash flow accounts for 35%, up from 15%.
"We don’t think it should come as a surprise that these changes imply no material improvement to ASOS’ position on trading and inventory during Black Friday."
They concluded: "Based on our estimates (c.30% below consensus), the stock trades at 40x FY23F PER. We continue to see ASOS in a precarious position: while online peers are focusing on cost control and will be well positioned for when demand picks up, we doubt ASOS will be in place to do so. Following Frasers’ c.5% stake in ASOS, the company is effectively becoming an M&A target, but not before tracking retail peers’ valuation."
ShoreCap, the 'house' broker for ASOS, has a 644p share price target on the stock, with the current share price at 630p down 72% from a year ago. The broker reiterated a ‘sell’ rating on ASOS.