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What’s the outlook for the ASOS share price after its full-year profit plummets?

Last week, ASOS reported a 68% drop in pre-tax profit, though its shares have soared after the retailer reassured investors that its IT issues are resolved and its well-prepared for the Black Friday sale season.

ASOS saw its pre-tax profit plummet by nearly 70%, with the online fashion retailer blaming the decline on IT issues at its warehouses in Europe and the US that hurt sales and drove up operating costs.

Despite the challenging environment, sales rose 13% to £2.73 billion in the year to August 31, though pre-tax profit slid 68% to £33.1 million.

‘This financial year was a pivotal period for ASOS, where we have invested significantly and enhanced our global platform capability to drive our future growth,’ ASOS CEO Nick Beighton said.

‘Regrettably this was more disruptive than we originally anticipated. However, having identified the root causes of our operational issues, we have made substantial progress over the last few months in resolving them.’

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ASOS shares soar on Black Friday

ASOS still has a lot of work ahead of it to get the business back on track, but its management certainly believes that the bulk of its problems are behind it and it is well-positioned to take advantage of the upcoming Black Friday sales season ahead of Christmas.

Investors seem to agree with the retailer, with its shares climbing nearly 40% in the wake of its full-year results last week. ASOS is currently trading at £35.10 as of 12:00 GMT on Tuesday.

‘Our focus now shifts to ensuring that we enhance our capability to drive an improved customer experience and leverage the benefits from the investments we have made,’ Beighton added.

‘With over 60% of our revenue coming from international customers and a strong global logistics platform with capacity to grow, we are well positioned to take advantage of the global growth opportunity ahead of us.’

You can go long or short ASOS with IG using derivatives such as CFDs and spead bets


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