ASOS is showing positive signs, but analysts say the U.K. fashion retailer needs to prove it can return to sales growth in a market environment marked by fierce competition from fast-fashion companies like Shein and Vinted. The following is a selection of analyst comments.
ASOS Seems to Be Making Progress
0825 GMT - ASOS seems to be progressing well despite the market environment, Shore Capital analysts Katie Cousins and Clive Black say in a research note. While there is still some caution relating to market pressures and customer trends, the actions and progress the U.K. online fashion retailer has made to support profitability are encouraging, the analysts say. The focus will now be on key consumer metrics including active customers, frequency, orders and conversions. "Improving these trends is key to earnings visibility," the analysts say. Shore Capital upgrades the stock to buy from hold. Shares trade 17% higher. (andrea.figueras@wsj.com)
ASOS's Update Seems Reassuring
0842 GMT - ASOS's update on its outlook and performance looks reassuring given its recent weak performance in the stock market, RBC Capital Markets analysts Richard Chamberlain and Manjari Dhar write in a research note. The London-listed online fashion retailer anticipates first-half revenue in line with market views and adjusted Ebitda ahead of consensus. The group has the opportunity to boost its presence in international markets, where it has local infrastructure and is therefore better able to serve the consumer, the analysts say. However, it might need to invest more to improve brand awareness, they add. Shares are up 18.5% at 302.20 pence. (andrea.figueras@wsj.com)
ASOS Needs to Raise Margins, Show Relevance, Peel Hunt Says
1432 GMT - Online fashion company ASOS needs to demonstrate the relevance of its platform again, Peel Hunt analysts say. "Success in own-brand sales, improving sales momentum, and signs of growth in frequency and active customers will be the barometer of success, in our view," the analysts write. The U.K. company also needs to return gross margins to the high 40s and generate cash to keep on track, they say. Its gross margin in fiscal 2024 was 40% and free cash inflow was 37.7 million pounds. Peel Hunt has raised its rating on the stock to add from hold, but keeps its target price at 375 pence. Shares are currently up 22% at 311.80 pence. (ian.walker@wsj.com)
ASOS Update Doesn't Seem Positive Enough -- Market Talk
1519 GMT - ASOS's update is a mixed bag, Panmure Liberum analysts Anubhav Malhotra and Wayne Brown write in a note. "We would caution against reading too positively into it," they say. The U.K. online fashion retailer expects significant improvement in profitability as well as earnings ahead of market views for the first half of its fiscal year 2025. However, it also estimates revenue in line with consensus, which currently guides for a 13% decline. The guidance for full-year Ebitda between 130 million pounds and 150 million pounds is based on assumptions of a return to flat sales or growth in the second half, which seems unlikely, they say. Shares are up 21% at 309.60 pence. (andrea.figueras@wsj.com)
(END) Dow Jones Newswires
March 21, 2025 11:34 ET (15:34 GMT)
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