Online Retailer Asos Plans to Seek Over $250 Million in Share Sale
(Bloomberg) -- Asos Plc, the U.K. online fashion retailer, is planning to seek more than 200 million pounds ($250 million) in a share sale to shore up its finances, people with knowledge of the matter said.
The London-listed company is close to finalizing a potential equity issuance, it said in a regulatory filing Tuesday, confirming an earlier Bloomberg News report. It didn’t give the potential size of the offering. Asos, which has a market value of about 1.3 billion pounds, is also working to extend its debt facilities, according to the filing.
“Whilst the company’s financial position remains robust, the duration and impact of the Covid-19 related crisis remains uncertain,” the company said in the statement. “Asos wants to ensure it can weather and exit the current trading environment in a position of strength.”
Asos joins travel retailer WH Smith Plc and recruiter Hays Plc in seeking to quickly sell new stock after U.K. corporate-governance norms were relaxed. After lobbying by investment banks, an influential investor group agreed last week that companies can conduct share placings equal to 20% of their market capitalization without going through rigorous formalities.
Shares of Asos rose as much as 42% in Tuesday trading, a record intraday jump, before paring gains on news of the proposed share sale. They were up 34%, the biggest gain in nearly 18 years, at the close in London.
No final decisions have been made, and the ultimate size of the offering could change depending on investor demand, the people said, asking not to be identified because the information is private. A representative for Asos declined to comment.
Asos sales rose more than 20% in the six months through February, it said Tuesday. The strong momentum from the peak period continued at the start of the year, making performance in January and February better than anticipated, according to the filing.
The company also said it made “significant progress” on reducing costs and recorded a “strong” profit during the half-year period. Asos is scheduled to report its results Wednesday for the first half of its financial year.
Asos has boosted its performance since the beginning of last year, when sales slumped following a poorly executed Black Friday that saw rival Boohoo Group Plc offer bigger discounts while Asos’s own-label products failed to lure young shoppers. Since then Asos has ramped up its marketing, improved product design and worked more closely with social media influencers.
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