After ASOS PLC (LSE:ASC) last week reported improving first-half profitability, broker Shore Capital said the near-50% rise in underlying profit underpins full-year forecasts as the online fashion retailer continues its turnaround.
The broker said trading is “developing in the right direction”, with gross merchandise value declines easing to 9% and sequential improvements through the half.
Womenswear has been a bright spot, with sales up 10%, while new customer growth across core markets points to progress in re-engaging shoppers.
Margins are also moving higher. Gross margin rose 330 basis points to 48.5%, helped by fulfilment improvements and tighter inventory control, while first-half EBITDA reached about £64 million.
Shore Capital left its full-year EBITDA forecast unchanged at £158 million, despite trimming revenue expectations to £2.3 billion. Cost control is expected to offset softer sales, with the group targeting gross margins of 48-50% for the year.
The focus now shifts to restoring growth, the broker said: “FY26 is all about re-engaging the customers and moving closer to GMV stabilisation”, with further improvement expected in the second half.
ASOS shares remain valued at about four times EBITDA, a discount to peers, with Shore Capital maintaining a 'buy' rating and a fair value of more than 400p.