ASOS share price: 3 things to watch out for in its full-year results
The online fashion retailer will unveil its annual results on Wednesday, with investors hoping for a strong end to a challenging year.
ASOS will unveil its full-year results on Wednesday, with the company looking to end the year on a high after a challenging 12 months of trading.
IG outlines what to look out for ahead of ASOS’ final set of figures.
ASOS revenues up, but earnings expected to fall
Despite a challenging 12 months, ASOS expects to increase its revenue by 12.7% to £2.7 billion compared with the previous year.
However, the online fashion retailer is forecast to report a 67% fall in headline earnings per share (EPS) to 32.3p, with statutory EPS expected to drop 68% to 31.3p.
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ASOS takes stock and looks to rebuild
Over the last 12 months of trading, ASOS has seen its share price lose nearly half its value, with it trading at close to £50 a share this time last year. The company closed at £26.35 on Monday.
The retailer has been plagued by a myriad of problems including stock availability issues and botched warehouse automation projects that led to thousands of customers cancelling orders after items failed to arrive on time.
All of this contributed to the company issuing three profit warnings over the last seven months, with each one sending its share price south.
Discounts and debt
ASOS once lacked online-only rivals, but that has all changed in recent years, with the rise of challengers like Boohoo, while high street brands like Next continue to focus on driving online sales.
ASOS’ increased competition has meant that it has had to cut prices to hold onto customers, with rival retailers following suit, leading to mass discounting piling on the pressure for players in the sector.
Adding to its woes, ASOS has seen its expenses surge this year, with the company moving its operations stateside to Atlanta. Consequently, the retailer is expecting to end the year with net debt of around £100 million – a first for the company.
‘Global online fashion is a growing, £220bn+ market. We now have the tech platform, the infrastructure, a constant conversation with our growing customer base who love our own great product and the constantly evolving edit of brands we present to them,’ ASOS CEO Nick Beighton said.
‘We believe that ultimately there will only be a handful of companies with truly global scale in this market. We are determined that ASOS will be one of them,’ he added.
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