ASOS shares soar on sales recovery: Investors rushed to buy shares in Asos on signs of a recovery in sales during the crucial Christmas trading period. Asos reported retail sales up by 19% during the three months to the end of February, which was a rapid acceleration on the 8% revenue increase in previous quarter. The increase in sales during the crucial festive period was taken as proof of a solid turnaround. However, Asos is having to cut prices to shift stock as the retail gross margin declined by 3.2% during the three months to the end of February, when compared to the corresponding quarter a year earlier. So, while sales may be increasing, profits could still suffer. The missing piece of the puzzle is how much advertising and marketing is also being used to drive these sales. And, much like the dotcom boom in the early 2000s, investors are buying shares purely on revenue growth and the hope of profits. Management reassured the market they are on target to hit expectations for pretax profits of £45 million, giving earnings per share of 41.5p, on revenue of £1.15 billion. Questor is less confident. Shares in Asos are now trading on 96 times forecast earnings for a company with falling profits, no dividend and a net asset value of about 2.6p per share. Asos at £37.02-423p. Questor Says “Sell”.
12 Mar '15
999..and getting fried/crispy Duck.....
12 Mar '15
I have no idea now if ASC is a buy, sell or a hold. But I do like toast & toasted shorters
12 Mar '15
RE: is it time to buy or to short?
Interestingly someone did say there was a short to medium gap to £45 to be filled, I must admit I didn't expect a 20% jump today did anyone else?
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