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Online fast fashion purveyor parts ways with Nick Beighton after six years of mixed success
Thursday 14 Oct 2021 Author: James Crux

ASOS (ASC:AIM) shareholders might be glad to see the retailer search for a new chief executive, given how the share price has performed poorly for chunks of Nick Beighton’s six-year tenure running the company.

Like rival Boohoo (BOO:AIM), ASOS is suffering from an uneven demand recovery and global supply chain challenges.

ASOS has massaged down sales growth guidance for the year to August 2022 to between 10% and 15% and expects first half sales growth to slow to mid-single digits.

This year’s adjusted pre-tax profit is now expected to be in the £110 million-to-£140 million range, so potentially as much as 40% below last year’s £193.6 million haul, as return rates normalise and ASOS feels the pinch from Brexit duties and rising freight, delivery and labour costs.

Beighton did have some success at the business, having overcome warehouse problems and stock availability challenges. He can’t be blamed for cost inflation as that is affecting multiple industries on a grand scale.

He helped to drive ASOS’s continued global expansion, with revenue rising from below £1.5 billion to approaching £4 billion during his tenure.

In-roads were made in the US, ASOS capitalised on the closure of rivals’ brick and mortar stores during the pandemic and snatched assets including Topshop out of the collapsed Arcadia empire, a stable of brands ASOS insists have seen ‘sustained triple digit sales growth’ since acquisition.

However, Shares is disappointed with ASOS’ recent share price performance. At £22.86, the stock is now more than 50% below the £48.79 level at which we said to buy in January 2021.

To regain lost ground, ASOS will need to turn product designs around quicker to stand out from the fast fashion crowd and accelerate the growth of Topshop in North America. With fast fashion’s practices in the firing line, it will also have to execute against ambitious new 2030 ESG (environmental, social and governance) goals.

We are heartened to hear ASOS’ plans to become a £7 billion revenue business within three to four years by doubling the size of the combined US and Europe business, growing own-brand sales by at least £1 billion and strengthening the ASOS platform through the launch of ‘Partner Fulfilment’.

We think it is worth sticking with the shares despite the near-term challenges.

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