Asos shares plunge as investors lose confidence
Asos shares have slumped more than eight per cent in early deals this morning, extending losses recorded over the past few months as investors have lost confidence in the retailer’s turnaround plan.
The e-commerce firm’s share price has dropped by a third in the last month and has fallen by half since the start of the year. It is down more than 15 per cent in the last five days alone.
Asos shares are currently changing hands for 233p per share, down from a mid-pandemic high of 5,772p per share in April 2021.
Analysts have blamed a general downturn in the e-commerce channel post-pandemic, something which has affected fellow retailers boohoo and Pretty Little Thing.
“The COVID boom sparked overinvestments across staff, stock and infrastructure that are still being unwound,” Jeffries analysts Andrew Wade and Grace Gilberg said.
“That unwind has been in part funded by reclaiming value from customers [via] range, delivery and proposition). The external data… suggests that these changes, coupled with competition, continue to impact demand,” the analysts added.
Asos reported an operating loss of £331.9m for the year to 1 September 2024, up £83.4m from a loss of £248.5m in 2023.
AJ Bell analyst Dan Coatsworth said that Asos, like JD Sports, has also been affected by a wider slowdown in consumer demand.
“Consumers bored at home during the pandemic merrily spent money but they have since taken their foot off the pedal as it looked like interest rates would stay higher for longer,” Coatsworth said.
Panmure Liberum analysts, too, suggested earlier this year that Asos “will struggle to turn around its declining sales trend this year… in the current demand environment”.
“Multiple inventory write-offs, a refinancing, an equity raise, and sale of a key asset later, Asos is seeing few signs of sales declines relenting and still finds itself on an unsure path,” Panmure analyst Anubhav Malhotra said.
“Its competitive position worldwide has been eroded due to improved multi-brand online propositions from the likes of NEXT, M&S [and] JD Sports, competition from China, and pulling back on the consumer offering in international markets,” he added.
“It appears the identity of the Asos brand isn’t as pronounced and distinct as was previously perceived.”
In addition to the above brokers, JP Morgan and Shore Capital analysts have both voiced concerns that Asos faces tough online competition and slower demand.