Member Info for hey_arnold

Sounds like a plan. Or you could do a relative value play and short boohoo Vs ASOS etc

Probs a good one to enter in six months once we have a better view on the impact of higher costs on the economy and whether inflation is truly transitory. As a perma bear I'm probably overstating the risks but stalling growth combined with higher costs doesn't seem a good mix for the UK or world in general.

I also suspect you will see some rotation out of online retailers to other sectors (energy) by long only funds. Covid gave these a nice boost as people changed their buying habbits and bought higher margin products. Unfortunately that was likely a temporary change in behaviour.

Margins have always been an issue at ASOS and with transportation and production costs rising they are going to be pressured further. Gladstone has been pretty aggressive selling into ASOS in the past driven by their view of tight margins. I suspect this could go sub 2500p with their help.

the court case will remain an overhang on this stock now till 2023. Although this remains on low multiples i can't see any near term catalyst to see this re-rate, and realistically given macro headwinds I think this could have some downside drift.

Good luck for tomorrow all those that stayed in here. My paper hands couldn't handle it.

Other issue with this stock is liquidity is crap so its hard to get out of it.

Very well put Simon. To add to this, gas prices have rallied 20% each day for the past two days. Having already gone up 10X from last year. This will get passed onto the consumers (who didn't lock in low rates) and consequently consumer spending is likely to fall.

Recession incoming I think that's what the hedgies are thinking.

Much higher input costs, reduced consumer spending and the potential for full blow recession due to high energy prices .

Problem now is there is real risk of the energy sector blowing up. Lots of people trading houses are getting huge margin calls, people are blowing up left right and centre and I wonder if eventually this feeds through to the likes of centrica.

I actually think if the macro head winds pick up, this could fall sub 2500.

Keeping buying then.

I ended up closing my position here. Consumer spending is likely to fall and all inputs costs are rising. Not a nice mix.

Still a lot of downside to go on this, input costs are roofing as the energy bull market continues, container shipping costs flying, consumer spending going to be heavily squeezed as inflation rises. This will equate to margin compression plus lower sales.

commodities are roofing, input costs are going to keep rising squeezing margins and consumer spending is going to be reduced.

This could correct down further if we see more macro headwinds. I don't think 160 is impossible at all.

Glad to hear you are no overinvested here caneToad. Wish I could say the same about my BWNG holding. High energy prices remain a concern to me with the whole complex looking structurally bullish for the next year. I suspect this could keep pressure on retailers input costs as well as depress consumer spending.

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Margin compression for higher input cots combined with reduced consumer spending, doesn't look good for retailers.