Asos (ASC) chief executive José Antonio Ramos Calamonte has been in the job for under a year but is already facing serious questions about the turnaround plan he is spearheading. Investors hoped he could swiftly improve the fortunes of the youth-focused online clothing retailer, which is creaking at the seams from a post-pandemic slowdown in ecommerce, weak profit margins, and heightened sectoral competition. But the evidence so far suggests that investors looking for material short to medium-term improvements will be left dissatisfied, while the long-term case for the shares looks distinctly underwhelming.
- Signs of strategic improvement
- Sales growth at flagship brand
- Might need to raise new capital
- Falling profit margins
- Customer base under severe pressure
- Competition from market entrants
Asos’s weakening position has been evident for some time. The shares once traded at over £70 a pop, but now sit below the £5 mark. The post-Covid-19 trading landscape is not a comfortable one for the Topshop and Miss Selfridge brand owner, with its target market (those in their 20s) badly hit by cost of living pressures and forced to return goods at levels that are materially detrimental to profits.