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.

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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.’

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