ASOS risks losing customers and EI Group goes Walkabout

“A rally in tobacco stocks isn’t enough to stop the FTSE 100 from going into reverse. The key offenders are utilities, tech and miners which serve to drag the blue chip index down 0.5% to 7,496. “European and Asian markets were also looking fragile amid ongoing concerns about the state of the global economy,” says Russ Mould, Investment Director at AJ Bell.

ASOS

“Having a strong brand is not the only key factor to prosper in the world of online retail. You also need the ability to manage the day-to-day business including flawless execution of warehouse operations, having enough stock, and maintaining superior customer service.

“ASOS’ glory days now seem a distant memory given how it has reported yet another profit warning. It is certainly failing on the operational front with a continuation of warehouse problems and stock availability.

“Fashion fans have plenty of places from which to buy clothes and so ASOS is at risk of losing out to the competition if it cannot fix its problems fast. We live in an impatient world where so many people want something in an instant. If ASOS doesn’t have the stock ready to ship then consumers will simply go elsewhere.

“Operational issues are also bad for its reputation as consumers lose trust in a brand if they cannot get what they want, when they want.”

EI Group

“It’s time for EI Group to go Walkabout. The pubs company is being taken over by Stonegate, best known for owning the Walkabout and Yates leisure chains.

“This represents the end of a very impressive turnaround story which has seen EI – previously known as Enterprise Inns – spend years drowning in debt before rebuilding its business and getting its finances in order.

“The timing was perfect as its estate was cleaned up just in time for EI to be in prime position to benefit from a structural shift in the market from food to drinks-led demand. EI is all about the latter and so it is perhaps no surprise that one of its closest rivals thought it was time to join forces.

“The shares were trading at 27p in January 2012 and Stonegate is now offering 285p cash per share – implying an incredible 955% return for any investor who held the stock during its darkest times.”

These articles are for information purposes only and are not a personal recommendation or advice.