Analyst's view: ASOS takes precautionary measures during coronavirus outbreak
8 Apr 2020
ASOS has seen sales of clothing and accessories drop 20-25 percent over the last three weeks and is taking precautionary measures as the coronavirus pandemic disrupts its financial outlook.
Nigel Frith, a senior market analyst at asktraders.com told FashionUnited: “The online retailer is in a better position than most bricks and mortar retailers and maintains a robust financial position. However, no retailer is safe under these current conditions.
ASOS isn’t in any form of trouble, but it wants to ensure that it comes out of the otherside of the coronavirus crisis is a strengthened position. The fact is no-one knows how long the lock down will go on for. Whilst ASOS is still fulfilling orders, demand has dropped. Furthermore, any problems with the GMB union concerning social distancing could put a temporary halt to orders being dispatched.
Given the uncertainties surrounding the coronavirus outbreak and its potential economic impact the move by ASOS to issue more equity and extend its debt facility is being viewed as a prudent. As a result, the share price soared following the announcement.”
Image via ASOS PLC