ASOS share price: where next after profit warning?
The online fashion retailer issued its second profit warning in seven months last week, sending its share price tumbling more than 21% helping short sellers cash in.
ASOS saw its share price tumble more than 21% after issuing its second profit warning n seven months on Thursday last week.
The online fashion retailer saw its stock fall from £27.46 to £21.60 in the early hours of Thursday last week, with its share continue to slide this week, sitting at £21.48 as of 11:30 GMT on Monday.
ASOS blames profit warning on IT blip in overseas warehouses
ASOS blamed its second profit warning of the year on an IT glitch that impacted its automated warehouse rollout in the US and Europe.
Despite the blip, the company still recorded sales growth of 12% in the four months to June 30. Sales in the UK and the rest of the world remained strong, but in Europe and the US revenues were held back by operational issues.
‘Embedding the change from the major overhaul of infrastructure and technology in our US and European warehouses has taken longer than we had anticipated, impacting our stock availability, sales and cost base in these regions,’ ASOS CEO Nick Beighton said.
‘Where we have been unencumbered by these issues we have seen robust growth and overall our customer momentum is improving with the business hitting 20m active customers globally for the first time,’ he added.
Short-sellers profit from ailing ASOS
Hedge funds have made significant profit shorting ASOS’ stock over the last 12 months of trading, which saw the online fashion retailer issue three profit warnings and is share price sliding more than 65%.
According to shorttracker, fund managers collectively hold a 4.37% holding against ASOS, with US-based hedge fund AQR Capital Management holding a 1.79% short position against the stock.
‘The latest profit warning comes after a frustrating year for the retailer,’ Marcus Morris-Eyton, portfolio manager at Allianz told The Times.
‘It is reassuring to see the chief executive and chairman buying shares, but this profit warning again delays the hoped-for margin recovery at Asos and comes at a time when investor confidence is low in the sector.’
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
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. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
European Central Bank meeting
Learn about how the ECB meeting affects interest rates and price stability ahead of the next announcement.
- How might the next meeting affect the markets?
- What are the key rate decisions to watch?
- Why is the Governing Council announcement important for traders?
Live prices on most popular markets