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ASOS shares back to crazy normal after profits rise 1

Article By: ,  Financial Analyst
October 20, 2015 1:55 PM

ASOS said its new year was off to a flying start after annual profit rose just 1% to £47.5m.

  • Total retail sales +17% to £1.12bn
  • UK sales + 27% (+23% in 2014/15)
  • International sales +11%
  • Gross margin rising 20 basis points
  • 2015-2016 sales growth forecast: 20% (19% in 2014/15)

 

“We remain focused on achieving our next staging post of £2.5bn sales,” said the firm, which remains AIM-listed despite its £2.4bn market value.

Having recovered from a tough 2014, with three profit warnings, and a crippling warehouse fire, hitting its full-year target is no mean feat.

It’s worth remembering though that ASOS’s shares have fallen from lofty heights, with recovery still some way off.

 

ASOS SHARE PRICE TREND

Please click image to enlarge

 

‘Faster fashion’ catching up

That likely reflects the fact that ‘Fast fashion’ retail has not stood still since ASOS’s dominance of the sector paused last year.

Upstarts like Boohoo and Zalando have often exceeded the older firm’s growth rates.

A shareholder base largely made up of institutional investors and wealthy individuals leaves ‘fast trading’ as the main use for the ‘fast fashion’ purveyor’s underlying stock.

The lack of dividend and a five-year beta that’s more than 100% higher than the fashion sector average, according to Reuters data, help explain ASOS’s frequent appearance among the LSE’s biggest shorts.

 

Back to crazy

Shorts of the underlying stock don’t seem to be favoured currently—look at its confident advance from 2015 lows.

However, that orderly rise is less than typical judging from this share’s notorious volatility.

Slightly more chaos has returned in the current session—the range in the opening hour alone was 9%.

Retracement towards the recently formed uptrend would be the expectation once the very near-term wave becomes definitively overextended.

Confirmation of that could be signalled by the Slow Stochastic indicator retreating from its current overbought state.

The short-term trend bisects a moderate support around 3038.9p, close to a 38.2% interval of the day’s rise so far.

61.8% is also crossed by the trend and the 50-hour moving average at about 2949.2p.

 

 

HOURLY CHART

Please click image to enlarge

 

 

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