Online Fashion Retailer Asos to Move to London Main Market
(Bloomberg) -- Asos Plc is moving its stock listing to the London stock exchange’s main market in a long-anticipated shift to attract more investors as demand for party dresses and formal wear fuels sales.
The U.K. online fashion retailer also said Thursday that sales over Christmas were solid, helped by brands like Topshop. After shocking the market with a profit warning in October, Asos held its full-year forecast steady and pointed to sales growth of as much as 15%.
Asos shares lost half their value in 2021 even as online shopping boomed. The retailer, like rivals Boohoo Group Plc and Hennes & Mauritz AB, has been hard hit by logistics problems that have made moving stock around the world more difficult since the pandemic and Brexit. Rising returns from customers, a big cost for online retailers, have also dented Asos’s performance.
After 20 years on the AIM segment, Asos expects to switch its listing to the main market at the end of next month. The stock rose as much as 12%.
Chief Operating Officer Mat Dunn, who is overseeing the business as a hunt for a new chief executive officer takes place, said the time is right for Asos to move its listing, even thought its market capitalization has been much higher in the past. He said the group has recently strengthened its finance and legal teams and has already been meeting higher reporting and governance standards required by the main market.
“This is something that was nice to do rather than essential to do,” he said on a media call, adding that a number of Asos’s investors were supportive of the move.
Shore Capital analyst Eleonora Dani said the switch was also a way for Asos to improve its profile after the recent profit warning, adding in an email: “The opportunity to be included in FTSE indexes is appealing.”
Asos shares have surged more than 11,000% since the retailer first went public in October 2001, and its current market value of 2.5 billion pounds ($3.4 billion) is among the biggest for companies listed on AIM. The stock closed at 2,259 pence on Wednesday, compared with its listing price of just 20 pence.
The move is a blow to AIM, which has worked for years to get past its reputation as a volatile venue where corporate blowups are commonplace. On the main market, Asos may be eligible to join the FTSE 250 Index.
Asos’s former Chief Executive Officer Nick Beighton stepped down in October as part of a management shake-up and has yet to be replaced. Dunn, who has ruled himself out of consideration for the role, said the search is proceeding as planned.
The company also named Patrick Kennedy, chairman of Bank of Ireland Group Plc and former CEO of Paddy Power Plc, to its board as an independent director. Asos reiterated that it expects adjusted pretax earnings this fiscal year to range from 110 million pounds to 140 million pounds.
©2022 Bloomberg L.P.