Why are ASOS shares falling?
The UK online fashion retailer lost 18% of its market cap in just two days.
- ASOS (LON: ASC) share price drops sharply to 2,298 pence on Tuesday (12 October)
- The fashion group said its CEO Nick Beighton would be stepping down
- It also announced its FY2021 results, in which UK sales saw ‘exceptional growth’
- However, FY2022’s profit before tax is forecasted to decline at least 27%
- Keen to take advantage of ASOS’ falling share price? Open an account with us to short the stock.
ASOS stock price: What’s the latest?
ASOS shares continue to fall, a day after it announced the departure of its CEO.
Shares plunged nearly 18% from last Friday’s closing price to under 2,300 pence on Tuesday morning.
Nick Beighton will step down after six years as CEO and 12 years with the business later this year, the group said on Monday.
A search for his successor is commencing. He will remain available to the Board until the end of 2021 to ensure a smooth handover.
The online fashion marketplace also announced other changes to its Board, as part of ‘the next phase of its global growth strategy’.
Mat Dunn, currently Chief Financial Officer, will take on the additional role of Chief Operating Officer and lead the business on a day-to-day basis. Meanwhile, Katy Mecklenburgh, currently Director of Group Finance, will become Interim Chief Financial Officer.
UK sales see ‘exceptional growth’ in FY2021
Separately, ASOS also released its annual results for the year ending 31 August 2021.
The company saw sales grow 22% year-on-year across the board, led by ‘exceptional’ UK sales, which burgeoned 36% year-on-year.
A 13% growth in active customer base to 26.4 million was also achieved during the year.
Adjusted profit before tax (PBT) came in at £193.6 million, a 36% year-on-year increase.
Free cash flow of £35.9 million was generated, which resulted in a net cash position of £199.5 million.
Read more: Beginner's guide to day trading
What’s the outlook for FY2022 and beyond?
Looking ahead, the company has forecasted for FY2022 sales growth to be in the range of 10% to 15%, with first half revenue growth somewhere in the mid-single digits.
It said there will be ‘tougher comparables in the first half of the year’, due to industry-wide supply chain pressures, which are expected to result in longer lead times and constrained supply from a number of partner brands.
However, an acceleration of sales is expected in the second half of the year, driven by increased event-led demand, an easing of supply constraints and marketing investment to support international growth.
FY2022’s adjusted PBT is expected to be in the range of £110m - £140m, which would equate to at least a 27% decline from FY2021.
The business also set out plans to deliver annual revenues of £7bn and an EBIT margin of at least 4%, within three to four years.
Feeling bearish about ASOS shares?
* Best trading platform as awarded at the ADVFN International Financial Awards and Professional Trader Awards 2019
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Live prices on most popular markets