Online fashion retailer ASOS PLC (LSE:ASC) underdelivered in today’s full-year results, but AJ Bell’s investment director Russ Mould highlighted several positives tucked away in the figures.
A lack of another profit warning drew “some comfort”, said Mould, as did ASOS’ improved debt profile thanks to a debt refinancing and the Topshop disposal.
ASOS netted £118 million after selling the majority of its Topshop and Topman brands to Danish multinational clothing business Bestseller.
The move was generally well received by City analysts, yet today’s results failed to energise the market, with shares tumbling 8% at the time of writing.
“Lower debt means less risk and less risk can mean a higher share price, all other things being equal, but the muted response to ASOS’ full-year results suggests investors think there is much work still to be done at the fast-fashion retailer, even as excess inventory is whittled away, cash released and borrowings cut,” said Mould.
On an adjusted (EBITDA) basis, ASOS’ £80 million in earnings slightly exceeded expectations, noted Mould, although that came as little comfort given the group’s losses before tax surged by 80% to £126 million.
Mould said: “ASOS shares trade at their lowest mark since 2009 thanks to wider worries about competition and consumer confidence, as well as the retailer’s own specific challenges and debate over the role of fast fashion in wardrobes and wider society, as some shoppers switch to Vinted, Depop and eBay to consume less and do so in a more curated way.”