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Asos still comes out swinging

The online fast retailer cautioned investors ahead of these results, but was the warning unnecessary?
October 17, 2018

All’s well that ends well it seems. Having taken a tumble in July, when bosses admitted annual revenues would grow at a rate towards the lower end of expectations, shares in online fashion group Asos (ASC) rebounded 15 per cent on the back of these full-year numbers. The market reaction suggests investors were more than satisfied with the eventual increase in the top-line and statutory profits, the latter of which trumped the consensus and the adjusted pre-tax forecast of Peel Hunt. Analysts at the broker still expect to see an 18 per cent hike in adjusted profits for FY2019, equating to EPS of 114p (from £102m and 98p in FY2018).

IC TIP: Buy at 5644p

The £43m net cash position marks a significant decrease year-on-year, but reflects a serious 12-months’ worth of investment, particularly across warehousing and technology capabilities, not mention a one-third build in inventory. Asos isn’t treating many of these “above the line” costs as exceptional items, either. For example, £25m in warehouse transition costs and a £2.7m charge for writing off its loyalty programme were all worked into general expenses. Even so, operating profits still rose by an impressive 28 per cent to £102m.

ASOS (ASC)    
ORD PRICE:5,644pMARKET VALUE:£4.72bn
TOUCH:5,640-5,646p12-MONTH HIGH:7,770pLOW: 4,500p
DIVIDEND YIELD:nilPE RATIO:57
NET ASSET VALUE:525p*NET CASH:£43m
Year to 31 AugTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20140.9846.944.6nil
20151.1452.749.4nil
20161.4442.841.8nil
20171.9280.077.2nil
20182.4210298.9nil
% change+26+28+28-
Ex-div:na   
Payment:na   
*Includes intangible assets of £258m or 309p a share