Investors advised to ‘hold’ as ASOS issues mixed Q1 update

As ASOS reports its Q1 results Graham Spooner, investment research analyst at The Share Centre, explains what it means for investors.

“Online fashion retailer ASOS announced a mixed update this morning with full year profits expected to be in line with expectations as it experienced one of its biggest ever trading weeks. The company reported that sales growth was slow in the period after a challenging couple of months, but sales have gathered momentum as we enter the key Christmas trading period.

“Total sales for the quarter grew by 8%, with UK retail sales up 24%. However, international retail sales declined by 2% and overseas trading conditions remain challenging.

“We continue to recommend ASOS as a 'hold' for investors while it works through short-term headwinds. The shares have fallen by over 60% year to date however, the shares are still fairly highly rated trading on a forward earning p/e above its peer group. We remain cautiously optimistic on its future as investment should give a boost to earnings in the longer term, supported by a strong balance sheet.”