5th Sep 2022 12:04
(Alliance News) - Asos PLC shares suffered on Monday after the Sunday Times reported the company has privately warned on its annual outturn.
The online only retailer is grappling with inflationary pressures, consumer confidence woes and large clothing return rates. Back in June, it said it expects adjusted pretax profit in the range of GBP20 million to GBP60 million for the year ended late-August.
The forecast was markedly below a guidance range of GBP110 million to GBP140 million which it had given prior to the outbreak of war in Ukraine.
According to the Sunday Times, Asos has also indicated to analysts that sales for the year will fall short of the 9.8% advance pencilled in by consensus.
It was not only the apparent guidance cut which unnerved analysts at Shore Capital Markets.
Shore is also concerned about the "potential of selective disclosure". The Sunday Times reported one analyst was worried about how Asos is managing expectations. An Asos source told the publication that this sort of briefing is customary, however.
"Whilst market expectations in aggregate have not necessarily been adjusted, we would be very worried about the basis for an orderly market in the group's shares as discussions and research notes around forecasts were evident from deliberately selective conversations with analysts," Shore explained.
"As a result, we would take a very dim view of the possibility, never mind the reality, of such behaviour and reiterate our 'sell' rating."
Shore expects Asos to post an adjusted pretax profit of GBP33.0 million, which would be down 83% from the GBP193.6 million the retailer achieved in financial 2021.
Last week Wednesday, German bank Berenberg said Asos likely suffered subdued summer period of trading.
"Visibility on more recent developments is low, particularly as many online peers have not noted a similar trend. However, data from SimilarWeb – historically a good guide for the company’s momentum – suggests that both June and July were relatively soft," Berenberg said.
SimilarWeb provides web analytics services and monitors website traffic.
Berenberg rates the stock at 'buy'.
By Eric Cunha; [email protected]
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