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ASOS tries to woo investors with new profit goal after rocky few months

·2-min read
FILE PHOTO: Smartphone with an ASOS app and a keyboard are seen in front of a displayed ASOS logo in this illustration picture

By Sarah Young

LONDON (Reuters) -British online fashion retailer ASOS laid out plans on Wednesday to double its profitability in the long term as it seeks to restore investor confidence after abruptly parting ways with its chief executive.

Shares in the fast-fashion specialist tumbled on Oct. 11 when it said profit could slump next year by more than 40% due to supply chain pressures and consumers returning to pre-pandemic shopping behaviours.

Nick Beighton, who had been chief executive for six years, left immediately that day in a shock that rattled shareholders.

At a capital markets day on Wednesday, ASOS tried get them back on side by forecasting a profit margin (EBIT) of at least 8% over the long term, double its existing medium-term goal, helped by increased cost and scale efficiencies as it expands.

Analysts at Jefferies said the new 8% target should make headlines but warned that it might not, given the company's recent performance.

"Set against the disappointing recent trading trend, market concerns over competition, and the 4% margin guide for the foreseeable future, we doubt management will get full credit for this yet," they said.

ASOS shares were flat at 0854 GMT and have lost nearly half of their value so far in 2021.

Finance chief Mat Dunn, who is now leading the company having added chief operating officer duties to his remit, said: "Our plan will ensure that we fully leverage our strong, scalable global platform to deliver our ambitions."

The clothes retailer, whose main market is 20-somethings, said it aimed to "relentlessly" improve its fashion credentials, improve partner brand availability, extend its range into face and body products and accelerate growth outside its home market.

Over the medium term, or the next three to four years, ASOS reiterated its target for 7 billion pounds ($9.4 billion) of sales with a margin on EBIT (earnings before interest and tax) of at least 4%, helped by a forecast doubling of its business in the European Union and United States.

($1 = 0.7414 pounds)

(Reporting by Sarah Young; Editing by Kate Holton and David Clarke)

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