£250mln wiped from value of ASOS as biggest shareholder cashes in

Shares sales from major shareholders, especially those at a discount to the market price, are often seen as a sell signal, but the City still reckons there’s some money to be made with ASOS

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At £5bn, ASOS is the biggest company on AIM

ASOS PLC’s (LON:ASC) biggest shareholder has sold off a chunk of its stake, a move which has wiped more than £250mln from the online fashion retailer’s market capitalisation.

Danish fashion group Bestseller, owned by billionaire Anders Holch Povlsen, sold 2mln shares at 5,685p apiece – 5% below Wednesday’s closing price of 5,986p. Unsurprisingly, the stock has slipped back to the sale price.

READ: How Asos became the ‘King of AIM’

Bestseller, which owns Jack & Jones and has a stake in Zalando, has been building its holding in ASOS since 2010 and, until yesterday, held 29.2% of the shares.

Following the sale, it still holds a 26.7% interest, meaning it is still comfortably the firm’s largest shareholder.

Next on the list is American investment management giant Capital Group Companies (11.0%), followed by Scottish asset management firm Baillie Gifford (7.7%) and one of ASOS’ founder, Nick Robertson (6.0%).

Bestseller insists that the disposal is just part of the “active management” of its portfolio and that it has no plans to reduce its holding to below 25% any time soon.

Sell signal?

Investors can be forgiven if the sale has made them a bit nervous, though. After all, it comes at a tricky time for the company, which is also known as ‘The King of AIM’.

Shares slumped over summer when it reported a 22% rise in third-quarter sales to £823.9mln.

It’s the kind of growth the likes of Marks and Spencer Group PLC (LON:MKS) and Next PLC (LON:NXT) can only dream of but the City had expected more and when you’re trading at a price-earnings multiple in excess of 60, you can’t afford to miss forecasts.

More generally, it’s a tricky retail environment for all at the moment, although admittedly less so for online retailers.

Still, ASOS is also having to deal with a weaker UK consumer environment with wages only just starting to grow faster than inflation and the uncertainty of Brexit looming large. Then there’s the rise of competitors such as boohoo PLC (LON:BOO), Zalando and the like.

Analysts still like it

That said, the shares are now almost 25% off their March highs and the stock seems to be in fashion with most City analysts.

Goldman Sachs upgraded its recommendation to ‘buy’ with a punchy 7,900p price target shortly after third-quarter numbers, citing continued penetration in Europe.

Liberum, Hargreaves Lansdown and Numis echoed those comments, noting the potential for growth outside of its core UK market. In fact, of the 25 brokers covering the stock, 18 are buyers while only five are sellers.

Quick facts: ASOS PLC

Price: 5066 GBX

Market: AIM
Market Cap: £5.05 billion

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