ASOS considers cash raise but says it has sufficient liquidity to ride out the crisis
ASOS is considering a cash raise through the release of shares and an extension to its debt facility, but the company says it has carried out various stress tests and is confident it has sufficient liquidity to see it through the COVID-19 crisis.
The online fashion giant said it would be releasing more details of the equity issuance soon and said it had achieved a strong performance in the first-half of its financial year with sales up 20% with the positive momentum achieved over Christmas carrying into January and February.
It added that it had also made significant progress on the goal of reducing non-strategic costs which, combined with stronger performance than anticipated in the January and February sale period, has resulted in a strong first-half profit and EBIT margin.
ASOS said that despite this strong performance, and its confidence that its existing £350m debt facility was sufficient, the unknown duration of the COVID-19 crisis had led it to take precautionary action.
"Whilst the Company's financial position remains robust, the duration and impact of the COVID-19 related crisis remains uncertain and ASOS wants to ensure it can weather and exit the current trading environment in a position of strength. The Company confirms that it is close to finalising a potential equity issuance and extension to its debt facilities," a statement said.
ASOS, like many online retailers, has remained operational during the COVID-19 crisis and while it has faced some criticism from the GMB Union over conditions in its Barnsley warehouse, the local council said it was satisfied the company was observing Government guidance on hygiene and social distancing.
Meanwhile analysts say that ASOS shares are good value and reiterated their status as a "buy". "With competitors such as New Look and Arcadia likely to be looking at accelerated store closures and declines, we continue to see the share price declines at ASOS and Boohoo as a buying opportunity," Peel Hunt said in a note.