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Asos co-founder sells shares amid ecommerce turbulence

Asos co-founder sells £10mn of shares
Asos co-founder sells shares amid ecommerce turbulence

The past two years have been a bumpy ride for ecommerce retailer Asos (ASC). Its share price shot up 70 per cent from its pre-pandemic level when people were in lockdown at home. However, when rising shipping costs started to kick in during the middle of 2021, profit margins started to shrink. Revenue growth has now also slowed against tough comparators and the share price has dropped below where it was before Covid-19 arrived in the UK.

In the four months to the end of 2021, the gross margins fell 400 basis points to 43 per cent because Asos needed to sell slow-moving summer clothes. Air freight has been needed, which is even more expensive than regular shipping costs, which are still around five times higher than pre-pandemic levels.

UK sales performed ahead of expectations, growing 13 per cent, and US sales were up a promising 11 per cent. The company sees the US as a potential saviour and has agreed to launch its brands through US retail business Nordstrom. Headwinds to expansion are coming, though. Energy prices are set to increase by over 50 per cent in the UK. 

Asos co-founder Nick Robertson has decided that now is the right time to sell £10mn-worth of shares. Asos’s problems aren’t unique – Amazon (US:AMZN) is having issues in the US and online home appliance retailer AO World (AO.) issued a profit warning at the end of last year. These problems might drag on. 

However, the silver linings are that top-line growth has continued and analysts expect it to increase 8 per cent in 2022 to £4.32bn. Asos also has a well-established brand, valued at $2.8bn (£2.1bn) by consultancy Kantar, making it the world’s 10th most valuable apparel name. 

On Kantar’s metric, Asos’s brand is more valuable than the whole business, which has a current market cap of £2bn. Cost inflation may stick around for a while, but brand recognition is elusive and expensive to build. This could be a case of holding on until some blue skies emerge. Unfortunately, it might be quite a long wait.

 

Buys    
CompanyDirector/PDMRDatePrice (p)Aggregate value (£)
Chaarat GoldMartin Andersson (ch)*27-28 Jan 2219                      135,070
Chapel DownSamantha Wren*01 Feb 2243                      340,000
Dr. MartensRobyn Perriss31 Jan 2230345,450
D4t4 SolutionsAsh Mehta (cfo)31 Jan 22290                        26,100
Euromoney Institutional Investor Leslie Van de Walle (ch)*01 Feb 22928                        46,400
FutureZillah Byng-Thorne (ce)03 Feb 223142                      233,393
Hibernia REITFergal O Dwyer28 Jan 221                        42,747
Holywood BowlIvan Schofield31 Jan 22254                        30,480
Hummingbird ResourcesDaniel Betts (ce)03 Feb 2213                        24,475
IG Group Matthew Brief (PDMR)28 Jan 22783                        97,875
Industrials REITRichard Smith02 Feb 22193                        28,875
IQEVictoria Hull03 Feb 2232                        75,000
IQGeoMax Royde*28 Jan 22132                        59,292
JTCJonathan Jennings (PDMR)*25-27 Jan 22737                        39,954
K3 Business TechnologyOliver Rupert Andrew Scott*28 Jan 22156                        33,520
Kingswood David Hudd (ch)01 Feb 2225                        37,500
Literacy CapitalChristopher Sellers (PDMR)02 Feb 22308                      138,600
Litigation Capital ManagementMary Gangemi (cfo)28 Jan 2291                        24,915
NCCJulie Chakraverty02-03 Feb 22190                        38,493
Polar Capital Win Robbins01 Feb 22637                        63,673
PureTech HealthBharatt Chowrira (PDMR)03 Feb 22255                        51,000
Ryanair Howard Millar02 Feb 22142 † 460,340 † 
SThreeAndrew Beach (cfo)31 Jan 22466                        29,996
SThreeJames Bilefield (ch)31 Jan 22468                        23,383
SThreeTimo Lehne (ce)31 Jan 22479                        26,832
UK Commercial Property REITKen McCullagh04 Feb 2284                        25,139
Zenith EnergyAndrea Cattaneo (ceo)31 Jan 221                      321,995
     
Sells    
CompanyDirector/PDMRDatePrice (p)Aggregate value (£)
ASOSNick Robertson27-31 Jan 222227                   9,984,713
JTCMichael Halloran (PDMR)26 Jan 22743                      222,900
Telefon AB EricssonNunzio Mirtillo (PDMR)31 Jan 22912 † 456,115 † 
TescoMatthew Simister (PDMR)01 Feb 22299                        59,838
Wizz AirJozsef Varadi (ce)*31 Jan 224055                   4,055,000
Virgin MoneyMark Thundercliffe (PDMR)01 Feb 22191                      156,292
     
*Spouse/Family/Close Associate. ** Placing / Open Offer  † Converted from € / $ / C$ / ZAR