Stock Market News
ASOS slumps as interim profit misses expectations, capex bumped up
ASOS was under pressure on Wednesday despite posting a 10% jump in first-half pre-tax profit, as the online fashion retailer's numbers were a little light and it announced an increase in capital expenditure to facilitate additional distribution and logistics facilities.
In the six months to 28 February, pre-tax profit rose to £29.9m from £27.3m in the same period a year ago, as revenue pushed up 25% to £1.16bn. Analysts had been expecting pre-tax profit of £30.8m.
Retail sales were up 26% to £1.13bn, with retail sales in the UK 22% higher at £414.5m and international retail sales up 28% to £716.8m.
Chief executive officer Nick Beighton said: "These results show strong trading at the same time as we are making substantial investment in our future. Our customer engagement is going from strength to strength and we've achieved more than a billion site visits for the first time.
"Alongside our investment in our people and our technology, we are accelerating investment in our distribution and logistics, laying the foundation for £4bn of net sales, a further step in building ASOS into the world's number one destination for fashion loving 20-somethings."
The company said there was no change to its FY18 reported sales or earnings before interest and tax guidance, but capex guidance was upped to between £230m and £250m for this year and the next. The company, which invested just over £95m of capex in the first half, had previously guided to £220m for the year.
ASOS said it expects to be free cash flow negative this year, extending into the next financial year, returning to free cash flow positive in FY2020.
At 0910 BST, the shares were down 9% to 6,393.84p.
Canaccord Genuity, which has been a consistent seller of ASOS based on the thesis that the cost of growth will continue to come in ahead of market expectations making the valuation hard to justify, said these results lend further support to its thesis.
However, Shore Capital said the results are "solid" and highlight continued momentum across all geographic regions and key performance indicators moving forward.
"The bears will highlight the additional capital expenditure in FY18 and FY19 but there is no change to either sales or margin guidance in either the short or medium term. ASOS continues to win from the structural channel shift online and is laying the foundations for £4bn of sales over the medium term," it said, as it reiterated its 'buy' rating on the stock.
Meanwhile, Numis, which also rates the stock at 'buy', said that while cash forecasts have been impacted by a further capex acceleration and working capital effects, "ASOS' investments are supporting and driving a clear, long-term, profitable growth opportunity".
In the six months to 28 February, pre-tax profit rose to £29.9m from £27.3m in the same period a year ago, as revenue pushed up 25% to £1.16bn. Analysts had been expecting pre-tax profit of £30.8m.
Retail sales were up 26% to £1.13bn, with retail sales in the UK 22% higher at £414.5m and international retail sales up 28% to £716.8m.
Chief executive officer Nick Beighton said: "These results show strong trading at the same time as we are making substantial investment in our future. Our customer engagement is going from strength to strength and we've achieved more than a billion site visits for the first time.
"Alongside our investment in our people and our technology, we are accelerating investment in our distribution and logistics, laying the foundation for £4bn of net sales, a further step in building ASOS into the world's number one destination for fashion loving 20-somethings."
The company said there was no change to its FY18 reported sales or earnings before interest and tax guidance, but capex guidance was upped to between £230m and £250m for this year and the next. The company, which invested just over £95m of capex in the first half, had previously guided to £220m for the year.
ASOS said it expects to be free cash flow negative this year, extending into the next financial year, returning to free cash flow positive in FY2020.
At 0910 BST, the shares were down 9% to 6,393.84p.
Canaccord Genuity, which has been a consistent seller of ASOS based on the thesis that the cost of growth will continue to come in ahead of market expectations making the valuation hard to justify, said these results lend further support to its thesis.
However, Shore Capital said the results are "solid" and highlight continued momentum across all geographic regions and key performance indicators moving forward.
"The bears will highlight the additional capital expenditure in FY18 and FY19 but there is no change to either sales or margin guidance in either the short or medium term. ASOS continues to win from the structural channel shift online and is laying the foundations for £4bn of sales over the medium term," it said, as it reiterated its 'buy' rating on the stock.
Meanwhile, Numis, which also rates the stock at 'buy', said that while cash forecasts have been impacted by a further capex acceleration and working capital effects, "ASOS' investments are supporting and driving a clear, long-term, profitable growth opportunity".
Related share prices |
---|
ASOS (ASC) share price |
Stock News headlines are gathered from financial news sources around the web. Views and opinions on each item are from their respective authors and website. They are not opinions of LiveCharts.co.uk
Get a free widget for your website with our latest headlines.
You can now add our live prices and new headlines to your website.The news widget features quotes for Oil prices, spot Gold price and Indices plus a choice of news channel for healines.
Top Shares pages
- Share price quotes
- Share charts
- Share watch list
- Company Results Calendar
- Top Large UK Shares
- UK Market Sectors
- Stock market news
- Company news
- Share tips
- A-Z company search
More share features
POPULAR Share Prices
- Royal Mail share price
- Lloyds share price
- HSBC share price
- Barclays share price
- Prudential share price
- Santander share price
- NEXT share price
- Diageo share price
- BP share price
- Vodafone share price
- British Airways
- Centrica share price
- Tesco share price
- Taylor Wimpey Share Price
- National Grid
- GKP Share Price
- Marks and Spencer
- Rolls Royce
- Rio Tinto
- THG Share Price
- Aviva Share Price
- Boil Share price
- Easyjet Share Price
- Genedrive Share Price
- SSE Share Price
- IAG Share Price
- Boohoo share price
- HE1 share price
- AVCT share price
- BOOM share price