Liberum slashes Asos price target after results

The broker, which has a ‘sell’ rating on the stock, said the results were "well below" current market expectations, with revenue declining 10% on CCY basis, and an adjusted pre-tax loss of £87.4m versus consensus of £63m.

It noted that sales trends worsened in January to February and that this has continued into March/April.

"While plans to deliver £300m of Driving Change agenda benefits in FY23E remain on track, guidance for FY23E has been cut to a circa £29m to £9m adjusted EBIT loss (consensus £38m profit) and free cash outflow of circa £100m (bottom end of prior range of -£0 to -£100m)," it said.

Liberum said gross margin is at risk of lost sales from the new strategy and therefore risk remains of a further inventory write-off given current trading trends.

"With free cash flow expectations reduced, we still see risk that in a plausible downside scenario, the group may need to raise further cash," it added.