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I'm in the city newsroom, checking Reuters wires. This just came up:

(Adds detail)

LONDON, May 16 (Reuters) - British online fashion retailer Boohoo sees a "clear path" to return to a profit margin of 6% to 8% in three years, its finance chief said on Tuesday.

"If you look at all of the reasons that our EBITDA margin went from 10% (in 2019-20) to 3.6% (in 2022-23), none of those reasons are structural," chief financial officer Shaun McCabe told Reuters.

"So what we expect to see over the course of the next three years is all of that coming back," he said.

Boohoo has been hurt by cost price inflation in raw materials, freight and energy.

"Now, when all of those prices are coming back down, we need to capture deflation," said McCabe.

"The walk that gets us back to the 6% to 8% that we've guided to for the medium term, we're very clear on the

components of that, we see a clear path."

McCabe was speaking to reporters after results today.

As well as Jefferies and Shore Capital, this statement from Gowling WLG…

Sarah Riding, retail partner at Gowling WLG, said there is still a clear path back to growth.

“Investors still have much to be hopeful for though as boohoo has proven it can return a significant profit and still has a large customer base, especially amongst younger generations who prefer the convenience of online shopping,” she said. “If the company can successfully close the gap on its margins while surviving the current pressures, then it's likely to get itself back to growth.”

This is a fantastic update, and has surprised the market.

As well as Jefferies today calling it a great performance, Shore Capital immediately now raise to a BUY and are extremely positive on this…

According to Shore Capital, the results beat consensus market expectations, and it raised the stock to 'buy' from 'hold'.

"Interestingly, the group reported a surprising net cash position of GBP6 million at the end of the period, contrary to the consensus expectation of net debt amounting to GBP60 million," Shore noted.

In financial 2023, boohoo expects revenue to be flat or to fall by as much as 5% from the prior year. The decline will be steeper in the first half, as the company increases its emphasis on making profitable sales. However, revenue growth is expected in the second half.

Yep, I can confirm, that was THEIR words, on the call to city reporters. They admitted a takeover could easily come and all they could do was address it when it came along. It could be from anywhere - big US company, look at the exchange rate! They can get an amazing company on the cheap. Combine this with the already dirt cheap SP then it's a cert.

Adam Cain, analyst at Pinsent Masons claims: "The current boom in UK public M&A activity will continue. The differential in valuations between the UK stock market and exchanges in countries such as the US continues to grow and an increasing number of overseas purchasers are identifying a large number of undervalued but extremely attractive UK listed companies that are trading at very low multiples. When this is combined with the relative weakness of sterling, it is clear that prevailing market conditions will continue to provide real opportunities for overseas acquirers to successfully execute Code compliant bids."

"Strategic buyers will also remain a key component of the UK public M&A landscape given they have large reserves of cash to deploy and are very focused on capitalising on a number of acquisition opportunities in the UK’s public markets," he said.

Cain said that prospective purchasers have "an increasing willingness" to "pursue a hostile takeover" of UK-listed companies.

"I see an increase in hostile activity taking place as a number of target boards and prospective purchasers may be unable to reconcile differences in valuation, with strategic bidders seeking to make their case directly to shareholders if management teams elect not to engage in a constructive manner on the grounds of an insufficient premium being offered to the company’s prevailing share price."

Asos : Berenberg cuts target price to 1000p from 1200p

But still double the current SP!

One other reminder - MIKE ASHLEY.

From BBC News just in the last year:

The owner of Sports Direct has become the fourth-largest shareholder in online fashion retailer Asos.

Frasers Group, which is owned by billionaire Mike Ashley, now owns 5.1% of Asos after building up shares in the company that holds the Topshop brand.

The company has bought up a number of UK retailers over the past few years spanning sportswear, fashion, furniture and bikes.

"Frasers Group has extensive ambitions to grow the business inside and outside of the UK and is constantly exploring the potential for further expansion," the company said.

The retail giant added the move was the latest example of its "its drive to expand and acquire businesses and brands that can strengthen Frasers Group".

I think you may have your answer as to where the takeover will come from.

"Asos may be a potential buyout target according to retail guru Clive Black at Shore Capital. Black and fellow analyst Eleonora Dani noted the low value of sterling might attract foreign interest.

Specifically, the American luxury department store Nordstrom was named as a potential buyer, while Black also highlighted a recent trend of traditional brick-and-mortar stores buying or building stakes in pure online players."

Watch this space. A bid is coming, mark my words...

Comments from the press call....

LONDON, May 10 (Reuters) - British online fashion retailer ASOS has ample liquidity meaning it does not

require another equity raise, its boss said on Wednesday.

"We're not seeing an equity raise on the horizon," Chief Executive José Antonio Ramos Calamonte told Reuters on Wednesday after ASOS reported a first half loss.

ASOS has a 350 million pound ($442 million) revolving credit facility through to November 2024 and at its Feb. 28 half year end had cash and undrawn facilities of 408.6 million pounds.

He said: said: "I am pleased with the strategic and rapid operational progress the business has made in the first half of the financial year, against some very challenging trading conditions."

He added: "While some of these changes have impacted short-term sales growth, there are many causes for optimism as we progress through the second half of the year."

He told reporters "I am very confident of our return to sustainable profit and cash generation in the second half of the year and beyond."

There was also lots of speculation over whether at a knocked down share price, a bid may come in for the company. Executives would not be drawn on this issue.

Nice positive article in the Mail by Deputy City Editor Francesca Washtell....

CITY WHISPERS: Short-sellers reduce Asos positions

Asos is gearing up to release first-half results, which it has already warned are likely to show a loss.

But one set of players in the City appears to think the fast fashion retailer's fortunes are looking up.

ALL FIVE big short-sellers targeting Asos, who would make money if the company's share price fell, have reduced their positions in recent weeks, indicating they think its stock might rise.

Watch this space...

Nice piece by Financial Editor Fran Washtell at the Mail..

CITY WHISPERS - ASOS SHORT SELLERS REDUCE.

Asos is gearing up to release first-half results, which it has already warned are likely to show a loss.

But one set of players in the City appears to think the fast fashion retailer's fortunes are looking up.

ALL five big short-sellers targeting Asos, who would make money if the company's share price fell, have reduced their positions in recent weeks, indicating they think its stock might rise.

https://www.thisismoney.co.uk/money/investing/article-12054779/CITY-WHISPERS-FTSE-takeover-barks-turn-bites.html

Another drop in shorts.
How the Sunday Times got away with their false claim I will never know.

BoA Merrill Lynch really going for it now
Something on the cards here…

Exactly. In cahoots. Utter tosh in that article. A decent journo wouldve reported the ACTUAL story that's happening.. ASOS shares rebounding from a fiver because in fact the number of traders shorting the stock has REDUCED. The Sunday Times financial editor should be ashamed.
This outfit may have a little £4m flutter - who cares. I'd rather look to what the juggernaut Bank of America Merrill Lynch are doing... piling in on ASOS having already raised the price target on Asos from £4.50 to £16.50.. I think these guys realise a takeover is coming or merger with Zalando.
It is only a matter of time.

Certainly is something cooking, seems that more shorters closing today, another steady rise back to at least a tenner I think. They sure know how to do a managed exit don't they!

Another reduced
Kuvari dropped 0.3 %
Total number of shorts now below 5 per cent

Marshall Wace reduced yesterday, now under 2 per cent

Qube too.

A very good sign.

You’re right - at the end of the analysts call, about 3 separate city journos asked or stated to the board that it seemed obvious asos was now a takeover target at this kind of share price and all the boated could do was reply along the lines that they realised that and they were “braced” for this

14 British companies have been approached with takeovers from private equity since the beginning of 2023, with more in the works. Victoria Scholar, an analyst at Interactive Investor, said: 'There's a sense among international investors that the UK is ripe with M&A targets.'
She said the recovery in the pound this year has encouraged 'opportunistic investors' to 'pounce on targets before it is too late'

https://www.thisismoney.co.uk/money/markets/article-11974101/Takeover-fever-grips-City-Private-equity-giants-swoop.html

Just saying’….

Fourteen British companies have been approached with takeovers from private equity since the beginning of 2023, with more in the works. Victoria Scholar, an analyst at Interactive Investor, said: 'There's a sense among international investors that the UK is ripe with M&A targets.'
She said the recovery in the pound this year has encouraged 'opportunistic investors' to 'pounce on targets before it is too late'

https://www.thisismoney.co.uk/money/markets/article-11974101/Takeover-fever-grips-City-Private-equity-giants-swoop.html

Fairly big reduction in shorts yesterday, most notably Marshall Wace still reducing. This is a big recovery play but also still a big chance of a takeover....