Frasers Group Continues to Raise Its Stake in Asos
Frasers Group has once again upped its stake in online retailer Asos.
In a new regulatory filing on the London Stock Exchange Tuesday, the Sports Direct owner increased its stake in the online fast fashion company to 16.8 percent from 10.5 percent — just months after its initial investment.
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In June, the Frasers Group made multiple incremental increases that raised its stake from 7.4 percent to 10.5 percent.
This move is part of the group’s recent stock purchasing spree, in which it has made “strategic stake” purchases in Boohoo and Mulberry, among others. “Driving growth through strategic investments is a core part of Frasers’ DNA,” the company said in a statement in June. “Under Michael Murray’s leadership, we continue to build on our long track record of establishing supportive shareholder positions in attractive retail companies.”
As for Asos, the company touted its “return to profitability” in its June P3 trading update with adjusted earnings before interest and tax up more than 20 million British pounds ($25 million, based on current exchange) year-over-year. At the same time, however, the retailer said that its return to profit came despite revenue declining by 14 percent, reflecting deliberate actions on capital allocation to improve profitability.
The trading update also addressed Asos’ efforts to clear out excess inventory. Asos said that it’s on track to deliver a 20 percent year-on-year reduction in stockholding by the end of its current financial year, with inventory down by 15 percent in its fiscal third quarter compared with the full fiscal year 2022.
“We are delivering on our plan to turn the business around: to right-size our stock; to generate cash; to reduce our net debt; and to structurally improve our profitability,” Asos CEO José Antonio Ramos Calamonte said in a statement in June. “I am confident in the direction we are going. We have restored profitability in the period and made good progress in clearing through our inventory to generate cash.”
Asos first announced its plans to right-size its stock portfolio when it posted its full-year results in October. At the time of the announcement, Asos said it closed fiscal year 2022 with 1.1 billion British pounds ($1.4 billion based on current exchange) of inventory, twice the size of its stock balance in fiscal year 2020.
In July, Asos launched a new closeout website in the U.K. to shed inventory.
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