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ASOS is trading at £19.23. The share price is down 20% since the retailer issued a profit warning last month, where the company stated that profits would be in the £45 million region down from the previous guidance of £62 million. Year-to-date the share price is down 72%, and the fashion house has issued three profit warnings in seven months.
CEO Nick Robertson admitted 2014 has been the ‘worst year’ in its short history — a fire at its warehouse in Barnsley, a strong pound and increased competition played a factor in the company’s performance.
ASOS is going to plough profits back into the company to help overseas expansion and reduce prices; this could be a short-term loss and a long-term gain. There were a couple of takeover rumours surrounding ASOS in the past two months, with Amazon and eBay named as possible suitors, but nothing came from it.
Despite the enormous decline in share price and the profit warnings, equity analysts are still bullish on ASOS. Out of the 27 recommendations, 14 are buys, seven are holds and six sells.
The stock is encountering resistance at the 50-day moving average of £22.61, but if estimates are missed it could take out the recent low of £17.44.