Asos shares have plummeted over 8% in early trading, exacerbating losses accumulated over several months as investors’ faith in the retailer’s recovery strategy has dwindled.
The e-commerce company’s share price has fallen by a third in the past month and has halved since the start of the year, with a 15% decline in the last five days alone, as reported by City AM.
Currently, Asos shares are trading at 233p per share, a significant drop from the mid-pandemic high of 5,772p per share in April 2021.
Analysts attribute this decline to a post-pandemic downturn in the e-commerce sector, which has also impacted fellow retailers boohoo and Pretty Little Thing.
“The COVID boom sparked overinvestments across staff, stock and infrastructure that are still being unwound,” noted Jeffries analysts Andrew Wade and Grace Gilberg.
“That unwind has been in part funded by reclaiming value from customers [via] range, delivery and proposition). The external data… suggests that these changes, coupled with competition, continue to impact demand,” they added.
Asos reported an operating loss of £331.9m for the year ending September 1, 2024, up £83.4m from a loss of £248.5m in 2023. AJ Bell analyst Dan Coatsworth observed that Asos, like JD Sports, has been affected by a broader slowdown in consumer demand, further contributing to its struggles.
“Consumers bored at home during the pandemic merrily spent money but they have since taken their foot off the pedal as it looked like interest rates would stay higher for longer,” Coatsworth observed.
Earlier this year, analysts from Panmure Liberum suggested that Asos “will struggle to turn around its declining sales trend this year… in the current demand environment.”
At the beginning of the year, Panmure warned investors about Asos, labelling it their least-preferred stock for 2025.
“Multiple inventory write-offs, a refinancing, an equity raise, and sale of a key asset later, Asos is seeing few signs of sales declines relenting and still finds itself on an unsure path,” stated Panmure analyst Anubhav Malhotra.
He also noted that “Its competitive position worldwide has been eroded due to improved multi-brand online propositions from the likes of NEXT, M&S [and] JD Sports, competition from China, and pulling back on the consumer offering in international markets.”
“It appears the identity of the Asos brand isn’t as pronounced and distinct as was previously perceived.”
Adding to these sentiments, analysts from both JP Morgan and Shore Capital expressed concerns regarding Asos facing stiff online competition and experiencing a slowdown in demand.
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