Asos raises £247m in share placing, Bestseller buys more shares
Apr 8, 2020
The news continued to pour out of Asos on Wednesday with the firm announcing the results of its share placing and the hundreds of millions of pounds it generated.
The company placed just short of 16 million new shares at 1,560p each, raising around £247 million. As mentioned in its original placing announcement on Tuesday evening, this added up to a little less than 19% of the firm’s share capital prior to the placing. The placing price was a very slight premium to the closing share price of 1,559.5p as of Tuesday’s market close and was reportedly more than four times oversubscribed.
So who exactly bought the new shares? Well, the company said around 95% of them were allocated to the firm’s existing shareholders, including a pro rata allocation to its biggest shareholder Bestseller United A/S, the Danish fashion retail giant.
The firm’s directors and management team also took part, including CEO Nick Beighton, plus Adam Crozier, Ian Dyson, Mai Fyfield, Karen Geary, Luke Jensen, Mat Dunn, Robert Birge and Sarah Holland.
It’s all designed to get the company through the difficult months ahead, even if there’s no improvement in trading for the next year-and-a-half.
The fundraising came alongside a new credit facility of between £60 million and £80 million and was in addition to the company having said on Tuesday that it believed it already had sufficient liquidity to get through the crisis.
The results of the placing were released the day after the company announced that its first half sales and profit had risen strongly but that the coronavirus has led to a 20%-25% sales drop in recent weeks. Given the almost total sales drops that some retailers relying on physical shops have seen, this is not a bad result and shows that online fashion shopping is still continuing during the crisis.
And analysts believe that the company is in a relatively strong position, despite the challenges it faces at present. Sofie Willmott, Lead Retail Analyst at GlobalData, said: “Asos’s carefully planned strategy for the peak trading period of 2019 clearly worked, with the online pureplay reporting impressive figures up against a troublesome 2018. However, it will not be able to build on this momentum to drive similar growth for the full year, with H2 set to be significantly disrupted by Covid-19.
“Sales over the past three weeks – since lockdown and isolation measures have been implemented across many of its key markets – have declined as customers struggle to justify making new purchases. However, [its] broad product offer across casualwear, loungewear and athleisure puts it in a better position than some of its competitors that rely heavily on occasion and partywear ranges, such as Boohoo and Quiz.”
GlobalData has already forecast UK clothing & footwear sales to decline 23.5% in 2020, but Wilmott added: “The online channel will fare better with expenditure expected to fall 10.8%, giving online retailers the opportunity to steal market share – particularly from Primark, TK Maxx and Next”.
However, she said online retailers can't assume it will be easy and Asos will need “to manage newness coming through without its usual photography and styling operations functioning as normal and with demand much lower”.
But at least its sales channel is open, unlike all those shuttered stores and some currently-closed webstores, “alleviating it from some of the excess inventory issues that other players will face when their stores and websites reopen”.
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