Where next for the ASOS share price ahead of its interim results?

ASOS shares will be in focus later this week when the company releases interim results and investors will be expecting it to report rapid growth as shoppers remain forced to buy their clothes online, but will it be able to keep up the momentum as the high street reopens?

Charts (4)

When will ASOS release its interim results?

ASOS will release interim results covering the six months to the end of February 2021 at 0700 GMT on April 8.

ASOS earnings consensus: what to expect

ASOS is expected to deliver a solid set of interim results later this week as people continue to shop online whilst clothing stores remain closed during lockdown. Sales jumped 23% in the first four months of the new financial year to £1.3 billion and surpassed management’s expectations.

The strong performance is expected to have continued for the rest of the first half considering the country has remained in lockdown during January and February. ASOS said back in January that it expected lockdown restrictions to provide a boost of ‘at least’ £40 million to interim pretax profit.

Analysts are expecting revenue growth in the first half to rise 23%, matching that reported in the first four months, while pretax profit is expected to treble year-on-year.

ASOS Earnings Consensus

H1 2020

H1 2021e

Revenue

£1.59 billion

£1.95 billion

Pretax Profit

£30.1 million

£90.08 million

How are the new brands performing?

Investors will also be watching out for news on how its newly-acquired brands are performing and being integrated into the wider ASOS family of brands. The company purchased Topshop, Topman, Miss Selfridge and HIIT brands out of administration earlier this year for £265 million in cash, and has not released an update since purchasing them and stating it would integrate them quickly.

The company’s original expectations were low and that the new brands wouldn’t contribute any earnings this year because its contribution would be offset by the initial costs of integrating them and ramping up output. The brands generated total revenue of £265 million in 2020 but the potential could be huge considering they were generating over £1 billion in annual revenue before the pandemic hit. ASOS will be hoping the brands can return to higher sales by being properly established online.

What is the outlook as the high street prepares to reopen?

There is little doubt that ASOS has been one of the big winners of retail over the past year, being one of only a handful of retailers that were fit for the digital age. The main question is how permanent the shift online will prove to be once the high street reopens and if ASOS can retain customers even as physical stores open their doors again.

Investors should feel confident. The company’s youthful clientele are more likely to continue shopping online and those that are tempted to return to the high street will have considerably fewer stores to choose from considering it has been decimated by the pandemic, with many staple brands – including the likes of Topshop and Topman – now only available online. Online players should still be among the biggest beneficiaries as people start to order their new wardrobes and come out of hibernation this year.

ASOS said back in January that it expected to deliver annual pretax profit in the current financial year toward the top end of market expectations of £141 million, which would be broadly level with the £142.1 million delivered in the year to end of August 2020. There is every chance that this could be upgraded this week depending on how well it has performed in the first half.

Where next for the ASOS share price?

ASOS has been trending steadily higher across the past year, hitting an all-time high of 6000 last month. 

The share price trades above its 20 & 50 sma on the daily chart indicating an established bullish trend.  

The RSI is in bullish territory, over 50 but with some way to go until overbought territory at 70, suggesting that there could be more upside to come. 

The bulls will need to break above the key 6000 resistance in order to target a fresh all time high beyond this psychological level, towards 6500. 

On the flip side, failure to break 6000 could produce a double top reversal pattern and see the price test its 20 sma at 5570. A break below this level could see the sellers gain momentum towards 5380 the 50 sma and 5050 the low March 8. 

How to trade ASOS shares

You can trade ASOS shares with City Index using spread-bets or CFDs, with spreads from 0.1%.

Follow these easy steps to start trading ASOS shares today.

  1. Open a City Index account, or log-in if you’re already a customer.
  2. Search for ‘ASOS’ in our award-winning platform
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade 

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