SHARE OF THE WEEK: Asos will deliver commercial figures
Asos will give an insight into the world of fast fashion and online shopping when it presents its trading figures next week.
Investors will be waiting for signs that the online retailer’s turnaround mission is on track.
Although Asos thrived during lockdown when high street stores closed, it has since endured a turbulent couple of years.
It was affected by inflation and the rate at which young customers returned clothes.
But it’s been almost a year since CEO José Antonio Ramos Calamonte pledged to overhaul the business model. The plan included less reliance on promotions and discounts, as this had eroded margins and increased return rates.
In its update for the three months to the end of May, the retailer said it was on track to make profits of £40m to £60m in the second half of the year. However, sales fell to £858.9m from £964.1m.
Aarin Chiekrie, analyst at Hargreaves Lansdown, said: “With revenue falling at double-digit rates in the third quarter, profitability rather than growth is now the order of the day at Asos.
‘Resources are being reallocated away from the United States, where large investments have so far delivered weak results.
‘Costs are also being reduced, and the group is on track to hit its £300m savings target, last we heard. These actions should stop the financial hemorrhage to some extent.” Asos raised around £80m through new shares, diluting existing shareholders’ stakes.
