Once royalty of the AIM market with a valuation that would have put it on the cusp of the FTSE 100, the demise of ASOS PLC (LSE:ASC), the fast fashion group, has been rapid and well chronicled.
Indeed, earlier this week the stock was bumping around at lows last seen 17 years ago.
Friday provided some relief as the share price jumped 19% after a brief trading statement provided proof the turnaround may be taking hold with underlying profitability ahead of market expectations.
A bright spot was a return to growth in full-price sales across its own-label ranges. ASOS said this rebound had been powered by its “Test & React” model, which allows it to trial small runs of new designs and quickly ramp up production if they prove popular.
The approach now accounts for more than 15% of own-brand sales and is continuing to grow, according to the company.
Analysts at Shore Capital have said that while they’re still being cautious about the challenges facing the market and changing customer habits, they’re encouraged by the steps the company has taken to strengthen its finances and boost profits.
With the share price now at its lowest since 2008, they believe the stock is looking much cheaper compared to rivals.
Based on expected earnings and sales, they see this as a good opportunity to invest, with the risks already reflected in the price.
As a result, they’ve upgraded their rating from ‘hold’ to ‘buy’.
The stock was up 47.2p at 302.2p