why not? Still absurdly high rating given margin pressure/competition and doubts about management bandwidth ...opinion only of course (more's the pity: should have shorted big time)
Questor protects investors capital: Online retailer ASOS issued its third profit warning within seven months sending shares more than 8% lower. The shares are now worth less than half what they were at the start of the year and Questor still believes they could have further to fall. ASOS said it now doesn’t expect a recovery in profits next year either and guided towards around £45 million, well short of previous expectations of £62 million. With the profits static at £45 million and earnings per share flat at 40.2p, that leaves the shares at £22.14 looking terribly exposed on 60 times forecast earnings. The real problem area is the economic slowdown in Australia. Nick Robertson, Chief Executive, said he is having to cut prices in Australia, one of his most profitable markets. The business contributes the “lion’s share” of sales from the rest of the world division. This division reported a 5% fall in sales for the three months to August, down from 14% growth in the first half. The division contributes about a quarter of the group’s total sales and profits. The U.K. remains the largest single division, contributing about 40% of group revenue and a third of group gross profits. Here sales increased by 33% but this performance is being dragged down by Australia and flat sales in the U.S. In Europe sales growth slowed to 21%, from 44% in the previous quarter. Long-term investors have certainly benefited from the fantastic growth at ASOS since it first raised £2.8 million on Aim in 2001. The company has been a great success and shares have soared since then. However, Questor retains its negative view at these prices and, given the outlook for retailers, the shares remain a sell. ASOS at £22.07-215p Questor Says “Sell”.
what a share
Binary beanie baby: Crash helmets and flameproof overalls would be better outfits for investors in Asos than the beanies and skater tees sold by the online fashion business. The shares fell 11.5% on Tuesday morning to £22.07, almost 70% below their February peak, after Asos warned 2015 profits would be no better than this year’s. Asos has been overvalued by the conventional benchmark of share price to forward earnings. It remains so at 52 times, on a Numis forecast of £44.3 million in pretax profits in 2014. But this is a binary stock. Either Asos will become an international behemoth, or not. Other travails have been the result of bad luck or bad planning. The first was represented by a warehouse fire. The second is epitomised by an IT system that, incredibly, given Asos’s aspirations, does not allow the Aim-quoted group to smooth out forex gyrations with regional pricing. Lombard, conventional down to his pinstripe suit and holey socks, sees Asos as a decent business at too high a price. Attrition from me-too competitors will fray its international advance. But investors clad in the robes of the true believer (kimonos, anyone?) should give irrepressible Founder Nick Robertson more credit for foresight.
Jour first post since joining in June......and an excellent one! Care to cast your eye over TCG?
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