ASOS shares hit again as profits tumble
Sep 16, 2014 at 9:26 am in General Trading by contrarianuk
They say profits warnings come in threes and it has certainly turned out to be the case with online fashion retailer Asos. The shares are down a further 10% to £21.80 after price cuts, a fire and infrastructure investments all hit earnings. A strong pound hasn’t helped matters, especially in countries like Russia where the Rouble has struggled meaning that Fashion shoppers are being forced to pay much more to buy Asos clothes. In total international markets account for 60% of sales. The shares are now down 60% in the last year and were trading just over £70 early in 2014 with the company now being valued at £1.8 billion. The company floated at 20p in 2001.
Although total sales grew 15% to £240 million in the three months to August 31, its fiscal fourth quarter, compared to the same period last year, annual pre-tax profits for the year to the end of August 2015 are now expected to be flat compared with the same period in the prior year at around £45 million compared with expectations of £62-69 million. Asos said that the fire in its Barnsley warehouse had cost it £25-30 million in lost sales but the UK which accounts for 41% of total sales grew revenues by 33%. However, international sales grew only 6% and overall margins fell by 6.4% over the latest quarter.
Nick Robertson, the chief executive, has certainly got his work cut out to restore investor confidence after this series of profit warnings with the international situation looking pretty bleak with tepid sales growth and margin pressures. The former stock market darling has got a real pasting since the first quarter of 2014. For those buying the shares near the £70 top, seeing £22 must be very painful.
Contrarian Investor UK
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