Frasers increases shareholding in ASOS after its return to profitability
Frasers Group has upped its shareholding in ASOS once again – and now holds a 10.6% stake in the online fashion giant – in a move that will add further fuel to stories that a potential take-over battle is brewing.
The move also comes as ASOS revealed a return to profitability in its latest quarterly numbers, despite a drop in sales.
This morning ASOS announced that adjusted pre-tax earnings for the quarter ending 31 May were up £20 million year-on-year, with the group set to meet its earnings guidance of between £40 million and £60 million over the current half-year.
The return to profitability was achieved despite an 11% decline in total group revenue to £858.9 million for the three-month period and a 14% decline in sales in the UK, its biggest market. ASOS said it had secured £200 million of cost savings and profit efficiencies so far this financial year is on track to meet its £300 million target.
Commenting on the numbers, CEO José Ramos Calamonte: “We continue to focus on making ASOS the best possible destination for our fashion-loving customers.
“At the same time, 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.
“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.”
Frasers first revealed last autumn that it had amassed a more than 5% stake in ASOS and subsequently took its shareholding up to 7.4%. Last week it upped its stake twice taking its holding to 9.9% before purchasing further shares today.
Mike Ashley's retail group is known for holding strategic stakes in fellow fashion businesses. As well as ASOS, it holds a more than 30% stake in luxury brand Mulberry, though it has said it has no plans to make a bid for the business (Mulberry is already majority owned by Challice, the investment vehicle for Singapore’s Ong Family, which owns around 56%). However Frasers is said to be agitating to gain representation on the Mulberry board.
In recent times it has also been increasing its stake in German luxury house Hugo Boss but, in fact, trimmed its shareholding down to 3.9% in January of this year. It also has a 25% interest in Hugo Boss via put options.
Frasers' recent upping of its ASOS stake comes amid rumours of a potential battle for control of the London-listed business.
Danish fashion billionaire, and owner of Bestseller, Anders Holch Povlsen is the biggest shareholder in ASOS with a more than 20% stake, while Camelot Capital (run by US hedge fund baron William Barker) holds 13%. Povlsen is understood to be keen for ASOS to remain listed on the stock market and he believes it can be turned around. If a potential tussle does emerge between Frasers and Povlsen, Camelot's 13% stake will be pivotal.
Meanwhile it was recently revealed that Turkish fast fashion retailer Trendyol, which is backed by Chinese giant Alibaba, was pondering a £1 billion bid for ASOS, which is currently valued at around £420 million, but there are understood to be no active talks underway between the two parties.
