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?

Go short and long with CFDs on ASOS and 16,000+ shares with the our award-winning platform.* Learn more about trading shares with us, or open an account to get started today.

* Based on the Investment Trends 2018 Singapore CFD & FX Report based on a survey of over 4,500 traders and investors. Awarded the Best Online Trading Platform by Influential Brands in 2020. Awarded the best retail FX provider for Asia by FX Markets in 2020.

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.

Please see important Research Disclaimer.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.