By Andrea Figueras
Shares in ASOS surged after the group said it forecasts a meaningful improvement in profitability as well as earnings ahead of market views for the first half of its fiscal year 2025.
The stock was 21% higher at 307.80 pence in early morning European trading. However, shares are currently down 31% over the year to date.
Shore Capital analysts warned that there is still some caution around market pressures and customer trends, at a time when the fast-fashion industry faces intense competition with players such as Shein, Temu and Vinted pushing the market. However, the progress the group has made in boosting profitability seems encouraging, the analysts said.
For the fiscal first half, the London-listed fashion retailer forecasts revenue in line with market views, while adjusted earnings before interest, taxes, depreciation and amortization should come ahead of consensus.
Analysts currently guide for a 13% decline in sales and adjusted Ebitda of 34 million pounds ($44.1 million), with a margin of 2.6%, according to consensus estimates provided by the company.
The update from ASOS comes roughly a week after Zara parent Inditex reported a slowdown in sales growth, raising concerns of a broader downturn in the retail sector.
ASOS noted that own brand full-price sales returned to growth during the first half, helped by the group's test and react model, which allows it to place orders in small batches and reorder using data-led forecasting.
The company will publish results for its fiscal first half on April 24. The focus will be on key consumer metrics, which are key to earnings visibility, such as the number of active customers, frequency, orders and conversions, Shore Capital said.
Earlier this week, the company's largest shareholder, Danish billionaire Anders Holch Povlsen, raised his stake in the group to 28% from 27.1% previously. Mike Ashley's Frasers Group is the company's second largest shareholder with a 22% shareholding.
Write to Andrea Figueras at andrea.figueras@wsj.com
(END) Dow Jones Newswires
March 21, 2025 05:42 ET (09:42 GMT)
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