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100% agree West. Patience and a good understanding of the change agenda are the key to holding this. It’s very volatile, but if you get the fundamentals and how the business will look in 18 months, then it makes for an easier hold.

Time for Asos to move its listing to the US. Guarantee we would have a valuation in the billions if they did that.

I’ve mentioned it before but look at Wayfair. $7bn valuation with a worse balance sheet and losing money. It’s crazy how low the ASOS market cap currently is.

It's annoying that this NED sale has broken the SP's upward momentum, but it doesn't change anything about the business and the forward strategy.

Are they still selling hundreds of millions of dollars of product a month? Yes

Have gross margins improved 350bps YOY? Yes

Are they on track to reduce inventory by 20% at year end? Yes

Are they still forecasting positive FCF for H2? Yes

Is the business worth more than the current share price? IMO yes and I think it should be £10+ if it's profitable

All of the positives from the last trading update are still relevant, so I don't think we need to be fundamentally concerned here. Understandably, people want the share price to go up in a straight line, but this market remains brutal and investors are very jittery.

Any sniff that gains might be erased and people are selling up in a heartbeat. Which is what we are seeing at the moment unfortunately.

Agreed - looks like he sells a bunch every year for personal purposes.

Hard to see a dividend here anytime in the next five years. ASOS will remain a growth company for the foreseeable future and once profits are back they will definitely reinvest for future expansion.

I still don't believe they've fully realised the true potential of Topshop and I can see a return to the high street in a few key areas (i.e. Oxford Street). This would create a real buzz in the market and help to lift the whole ASOS group in terms of brand awareness, etc.

Plenty of upside here and I'm definitely holding long term. We are nearing the bottom of the cycle and once the economy starts to improve, this should see a sustained rise in SP.

Here's the text of the email I received:

"We’re busier than usual at the moment – and this might affect how quickly we can dispatch your order. But don’t worry, we’re working as fast as possible to get it to you. Once it’s packed, we’ll send you another email with a tracking link so you can follow its journey right to your door.

Also, don’t forget you can download the ASOS app and set up delivery and returns notifications for your orders (plus you can get the deets on some exclusive discounts – just saying…)

We really appreciate your patience – thanks for shopping at ASOS"

@SavvyInvestor - definitely a genuine order and I was pleased to see the email, which hopefully means a good quarter is in store for the business.

I think a lot of consumers tightened their belts over late 2022/early 2023 (given all the doom and gloom around the cost of living crisis), but now they want to spend some cash again and retail appears to be benefitting positively from this.

Would love to see an unscheduled trading update which raises guidance for the year.

I did my bit last week and placed a decent order for some summer clothes. Got an email yesterday saying that the company was busier than usual at present but my order would be dispatched soon.

I’ll take that as good news while we wait for more official updates!

Fair point on the revenue growth but we should be at least back to book value (700p) given they're back in profit. There is no reason for a discount to the net asset value when you're making money. If you keep making money year on year then naturally the share price will increase over time, as the company is building equity in its balance sheet.

Absolutely Karl and I feel the same way. The most important thing for long term holders, is that the business will survive the bottom of this economic cycle and can ride the wave of growth when the rebound comes.

You definitely couldn’t say that last week. If they had made another big loss they would be in deep trouble.

Have to say I rate the current CEO very highly. He’s extremely sharp and knows exactly the levers to pull to get the business back on track. The analyst call this morning was impressive.

We also need to work through all of the traders who bought in the 325 - 335p range. It will happen but might take a few days.

More than happy to be patient on this. We are making money and that is a big deal after the doom and gloom.

Agree with everything you say there Happy.

A great trading update and glad to see the business is on the right track. If the business is back to profitability, there is no reason why the shares should be trading at a discount to book value.

I thought a key point in the commentary was about the new financing facility. There is the option to exit early if ASOS wants, but also to extend for a further year in need. This provides great flexibility and is welcome news.

Lots of people will flip this for a quick buck, but we should be back to the £7’s over the next month or so.

GGG - I think it’s highly unlikely they will miss their guidance and I agree with you that the update will be largely positive.

They are working on the things they can control - stock management, reducing overheads, marketing spend, etc.

in the current environment, I’d say it’s difficult for them to predict their sales and return rates with much accuracy. Hence why they’re focusing on the profitability of the sales they do generate.

What’s great about that strategy is that this operating model should stick when the economy eventually improves. So the business should be far more profitable than previously and the SP much higher than it is today. There’s room to grow in this market globally, and I don’t think they should limit themselves to their current regions forever.

TalkingTrades

I’ve been through your post history and you’ve been on quite the emotional journey here. Coming in bullish, averaging down twice (to 380p I believe) and now sh**ting the bed because your position has grown to an uncomfortable size and is down 14%.

Most people here have averages way above yours and are managing to keep it together. So please do us a favour and relax a bit.

If the trading update is good, you’ll be absolutely fine and will make some money. If it’s bad, then you might have to get out and buy some tech stocks to make your money back. Although I suspect the reason you’re salty is that the US market is seeing big gains at the moment and you’re stuck here not wanting to crystallise a small(ish) loss.

Bring on Thursday I say. The company has been very accurate with guidance since the new CEO took over, so I’m hoping for a decent update with no material deviations (to the downside at least).

No idea why there’s no capitals in that message…

Anyway, time for a pint myself and hope everyone has a good weekend. Cheers.

time for a beer tt. it’s friday and the sun is shining. asos will still be in business on monday morning!

but in all seriousness, someone needed to be on the other side of that 3m uncrossing trade to stop a huge drop today. suspect it’s ma but you never know.

the retail sales figures probably spooked a few people today. look at boo down almost 9%. the economic data is ****e and that’s weighing on retail stocks.

medium term, if the business is still battling then they can always flog off a few brands to deleverage. ma would probably pick up the top shop brands for £150-£200m if asos was desperate to sell. plenty of options on the table before things become terminal.

@ShearClass - the inventory will come down as they reduced their intake at the end of the last year. So if they haven't made as many purchases the position will naturally reduce as they sell through their existing stock. Hence why I think management are confident in their cashflow guidance.

Key for me seeing if the margin improvement has been sustainted. They noted that gross margin was up 300bps YOY in March/April and it would be positive if this continued into May as well. Sales will be down but they've already guided for a low double digit decline for FYE23.

They've already improved their inventory turn from 176 days (FYE22) to 150 days at 1H23. If they can get this down to FYE20 levels (111 days) then the business will be generating a lot more profits and cashflow.

So I think they've got the right idea and it's all about execution now.

Guys - the company isn't going into administration because they wrote off some stock, got out of a few leases early, and made a small operating loss. This is first period of losses that they've had in at least five years (probably longer but I can't see that far back) and is due to cost of living factors and a build up of inventory as supply chains got all messed up last year.

We need to relax a bit and stop speculating. The numbers will speak for themselves and we can discuss them at length when they come out next week. I appreciate that most investors are underwater, but it's good to take a step back sometimes and look at the business over a longer timeframe.

This insurance news is unwelcome but not unsurprising. They will run a mile at the first sign of a recession or negative earnings, but will also be back in a flash once things stabilise.

I'm looking forward to next week - most of the driving change initiatives are baked in and hopefully we see improved margins and some positive cashflow. Not expecting them to set the world on fire, but steady progress is all we need.

That article is sensationalised and clearly written for clicks. The pain is now behind us with the inventory write off already booked, along with vacating certain premises and streamlining costs. The major shareholders wouldn’t have stumped up another £75M if they didn’t believe the business is on the right track. And they will know a hell of a lot more than we do.

I’ve been looking up some comparable US companies and their valuations are eye watering compared to ASOS. As an example, Wayfair had 1Q23 revenues of $3bn, gross margin of 29%, and made a net loss of $350M for quarter (yes one quarter). Book equity is negative to the tune of $2.7bn and the company has around 24M active users.

After taking all of that into account , the business has a market cap of $5.5bn.

Yet here we are at a £418M market cap - with more active users, better margins, a healthier balance sheet, and lower losses (the majority of which relate to the stock write off and turnaround plan).

The discount on UK stocks is quite mad sometimes.

Https://www.similarweb.com/website/asos.com/#overview

Up 6% month on month to 84.0M visits. Still number two in Fashion & Apparel behind Next.

Hardly screams of a brand in decline and I suspect why major shareholders are happy to add/participate in fundraises at these levels.

Patiently waiting for the P3 trading update in two weeks. No point in making any rash investment decisions until then.