Yahoo Finance Asos hit by supply chain issues but aims to move to FTSE 100
Asos (ASC.L) experienced revenue growth in the last quarter of 2021 despite supply chain issues and uncertainty due to the spread of the Omicron variant, and it now has ambitions to be listed in the FTSE 100 (^FTSE). Its stock soared 6.4% as markets opened in London.
The online fashion retailer announced intentions to move to the London Stock Exchange's main market, expected by end of February, believing that over the past 20 years it has demonstrated a proven track record and built a broad shareholder base.
Its directors said the move would “further enhance its corporate profile and recognition”, as well as allow global institutional shareholders to buy stake in the company.
It posted total sales growth of 5%, following a 22% rise in the year to end August, while gross margin decreased by 400 basis points to 43% due to a need to discount goods and higher shipping costs.
Active customer base increased by 0.3m customers to 26.7m, reflecting slower customer growth
"Asos has delivered a robust start to the year, in line with the guidance we set out at full-year results, despite challenging market conditions,” said Mat Dunn, COO.
"We are also pleased to announce today that we plan to move to the main market of the London Stock Exchange. Our listing on AIM for the past 20 years has been an important part of ASOS' development, but the time is now right to move to the main market as we focus on delivering our medium-term guidance and longer-term growth ambitions."
Performance in the UK was ahead of expectations, rising 13%, supported by strong peak performance and demand for going out clothes as lockdown restrictions eased.
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In the EU sales grew by 2%, significantly impacted by the fourth COVID wave, with resulting restrictions limiting events and going out occasions
The US saw growth of 11% despite significant port congestion and supply chain disruption inhibiting our ability to fully service demand, while sales in the rest of the world were down 15%, “reflecting the continued impact of extended delivery propositions.”
"ASOS has benefited from the latest styles coming back in fashion as partygoers in the UK geared up for a season of celebrating, with growth for this market coming in ahead of expectations,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
“But it’s not helped boost its profit guidance as elsewhere the group facing ongoing headwinds, constraining growth. Supply chain challenges continue to be a headache for the group and overall demand is still extremely volatile due to fresh waves of Covid crashing on key markets.”
She added that investors appear confident that Asos "is taking the right strategy to ride out the storm and have been buoyed by evidence in the UK of a strong appetite for occasion wear. ‘
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