Can the Asos share price fashion a turnaround?

With Asos’ share price plunging 93% since February 2021, and 54% in six months, investors will be hoping its collaboration with Rokt provides respite. Following Asos’ recent return to profit, Frasers Group has been busy increasing its stake in the e-commerce fashion retailer. Meanwhile, Asos has been accused of copying Maybelline New York's viral London advert with its Kylie Cosmetics campaign.

  • Asos share price down over 90% since pandemic peaks. 
  • Retailer reveals AI partnership with Rokt in post-purchase marketing play.
  • Frasers Group ups Asos stake to almost 20%. 

With the Asos [ASC] share price plunging 93% since February 2021, and down 54% in just the last six months, investors will be hoping that the recently announced artificial intelligence (AI) collaboration with e-commerce firm Rokt will help boost revenues, and contribute to a turnaround in its fortunes. 

The partnership announcement follows Asos’s latest earnings update, in which the group announced a return to profit. Meanwhile, Mike Ashley’s Frasers Group [FRAS] has recently upped its stake in the online fashion retailer, and owner of brands including Miss Selfridge, Topshop and Topman, to over 19%. In other, less positive news, Asos has been accused of copying L'Oréal-owned [OR.PA] Maybelline New York's viral London advert with its Kylie Cosmetics campaign. 

Latest results boost Asos share price

A prolonged decline in Asos’ share price over the last half decade led to the company's demotion from the FTSE 250 in June. The Asos share price did stage an impressive recovery during the Covid-19 pandemic, thanks to a boom in online shopping, before resuming the longer-term downtrend in mid-2021. 

On the plus side, however, Asos’ share price has gained 21.34% since sinking to a 52-week low of 320.33p on 12 June, closing out Friday 25 August at 388.70p. But the stock has fallen 68.44% since the 2 February 52-week high of 1,015.00p. 

AI collaboration with Rokt aims to boost sales

Asos has partnered with e-commerce technology company Rokt, which will enable the fashion retailer to provide shoppers with targeted post-purchase content and offers, reports Retail Gazette. Rokt specialises in tech and software solutions, helping to drive added value with personalised offers for every transaction, and currently works with the likes of supermarket Morrisons. 

The partnership means Asos will be able to create personalised experiences for customers, as well as introducing relevant offers from Rokt’s marketplace. Asos Media Group Director, Elton Ollerhead, said that the company “will now be able to personalise their journey even more after completing a purchase”. 

Frasers Group ups Asos stake

British retail giant Frasers Group has continued to increase its stake in Asos this month — first from 10.8% to nearly 16.8% earlier in August, and then to 19.3% on Friday 25 August. The moves by Mike Ashley’s Fraser’s Group, owner of department chain House of Fraser and Sports Direct, suggest the organisation feels the current Asos share price represents good value. 

With the group continuing to expand its retail empire, after taking a stake in a range of retailers including Boohoo [BOO.L], the latest purchase of Asos shares is part of a wider strategy to grow “strategic investments … in attractive retail companies”.

Latest results offer investors hope

The firm’s most recent results, released in June, helped Asos’ share price climb — by 14.76%, from 328.0p to 376.40p – on the day, after third quarter sales of £859m came in ahead of consensus expectations, despite a 14% year-on-year decline. Asos also returned to profit in the quarter as core earnings rose by £20m year-on-year, and said it was on course to deliver adjusted earnings before interest and tax (EBIT) guidance of between £40m and £60m for the second half of its financial year. 

Asos has also been working hard to cut costs, and announced savings of £200m year-to-date in June. The group has also raised £80m through a new share issue, plus £275m from debt refinancing. Weighing against this, the company shed close to 800,000 active customers in the quarter, while revenue fell across all its geographies. 

Asos faces plagiarism accusations 

Asos has deleted an advert promoting its partnership with Coty’s [COTY] Kylie Cosmetics, after being accused of copying L'Oréal’s Maybelline New York's London Underground video. Asos released a video on TikTok and Instagram using augmented reality showing a Kylash mascara travelling through a Tube station, as part of a campaign to promote the brand. 

However, Asos’s video was highlighted by social media users as being very similar to the Maybelline video clip of a tube carriage with eyelashes driving under a Sky High Mascara wand. L'Oréal’s Maybelline video has received over 12m views since its release last month. 

What’s next for the Asos share price?

There’s little doubt that the company faces a number of ongoing cost challenges, but it could also be justifiably said that the shares offer potential value relative to historic levels. Among 28 analysts offering 12-month price targets on Asos with the Financial Times, the median target of 477.53p represents a potential upside of 22.85%, versus last Friday’s 388.70p close. 

Analysts have a consensus ‘hold’ on the Asos share price, with 16 of 27 analysts taking that view. Among the remaining analysts polled by the Financial Times, there’s a mixed bag of three ‘buy’, two ‘outperform’, five ‘underperform’, and one ‘sell’ recommendation.

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