Overview of ASOS Plc
The report seeks to analyse the financial of ASOS Plc, a company listed on London Stock Exchange. The company is UK based and is an online retail company. The company is engaged in a selling a range of fashionable products online. The company segment include UK, US, EU and rest of world. The company has more than 90000 products listed on its website and brand includes ASOS design, ASOS edition, collusion, reclaimed vintage and HIIT. The company has three centers in the United Kingdom, United States of America and Germany. The company is headed by Ion Dyson who sits as non executive chairman on the board.
The company has seen a phenomenal growth and the revenue of the company has witnessed a spark growth over the period of 5 years. The last 5 years have marked a new era for the company as there has been a growth of 17% in the financials of the company on average. The annual report depicts that company has been actively experimenting the in the market to ensure a very high growth. Such growth has been ensure through organic and inorganic means. The forecast of the company has been good and the management believes that company future shall be even stronger. The company believes that there has been pressure on the supply side in the festivities rush on account of high demand. The company needs to overhaul the same so as to reduce the impact on the company in such future sales. The company has been able to tap both domestic and international market which is witnessed from chairman message over the years.
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what is said |
pages |
theme |
Historic future looking mixed |
good news optimistic |
neutral news balances reporting |
bad news |
|
There was an increase in the sales in 2021 but the CEO warned of more shortcomings in future due to covid 19 volatility. |
2 |
Covid 19 impact |
Mixed(forecast) |
Preparation and taking caution |
Future challenge |
Sales decline |
|
Supply chain issues amidst the festive season shopping rush |
2 |
Supply chain |
Future |
Caution |
Future challenge |
Sales pressure |
|
the talent, passion, resilience and commitment of the Executive team and ASOSers shone and helped us deliver the strong results. |
1 |
Executive performance |
Historic |
Good news |
||
|
The past three years the company have hand a consisted 60% growth in the revenue which has improved balance sheet and profitability. |
1 |
profitability |
historic |
Good news |
||
|
The company has improved management team and the ASOS operational ability and resilience. |
2 |
Employee management |
future |
optimist |
|
Issue |
count |
Cause of concern |
|
Profit and prioritization |
6 |
The top business management of the organization has keen interest in improvement of company profit and rise in the sales (Lester, 2020). |
|
Customers |
9 |
They are the focus of the business and the business has keen interest in expanding customer base as well as improvement of the customer relations. |
|
Online |
61 |
90% of total revenue of the business comes from online sales through their ecommerce platform. The CEO thought there was need to improve the online business presence. |
|
Fashion |
76 |
The business deal with fashion industry that is usually dynamics, there was need for the business to update their product so that the client can have their preference attended. |
|
operation |
50 |
In his speech, the chief executive officer pointed the need to have streamlined in operation management (Estopinan, 2020). This would enable the business withstand the changes in the industry. |
|
executive |
57 |
The major role of the business performance was staked on the performance of the executive. There was a concern that the business performance would be fulfilled in the event that the executive management was right to their duty. |
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Cost pressure |
32 |
The management of the organization felt that in future the business will be subject to cost pressure sourced from the competition that will need the business to reduce the price of their products. |
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own-brand sales |
41 |
There is need for the organization to strengthen their brands and product in the face of the market. It is only this way that the business could improve their market presence and improve their sales in the face of globalization. |
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international growth |
52 |
The businesses have strategically targeted to have a rise of their international presence and sale from the normal 4% to 7 years in the next financial year that is 2022-2023. This is a business priority to be attained in the following business |
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ASOS Platform |
45 |
This is the main platform to which most trade offsets. The organization feel the need to improve their approach in ecommerce by strengthening their platform, creating more traffic and devising new approach to reach to the client fast and effective. |
The chairman message has been clear in relation to growth forecast and the profit of the company is also witnessing a similar rise. The company has increased its capital expenditure and has also resorted to debt for its financing. As per my belief, the company is on a very strong growth trajectory and sooner or later shall capture a greater share of the market. The major hurdle for the company is its supply chain and the company is actively concentrating on the supply chain with a range of partnership and acquisition over the period. The company expects a rise in profit which shall result in higher valuation of the company. However, the market does not consider this change in same front as the shares have declined 60% from its high today and the market is not having any string positive expectation for the company which is a cause of concern.
On perusal of the financial statement of the company, it may be seen that the gross profit of the company is strong and the net profit of the company has improved over the period. The assets of the company has been increasing over the period which increases the chances of going concern. The value of intangible asset in the books of the company is low and which increases the chance of going concern. On an overall basis, the balance sheet of the company is strong which is an indication of good future for the company.
The company is compliant with IFRS which is clearly depicted from the financials and notes to accounts of the company. The company has duly adopted IFRS and all major IFRS compliant accounting has been defined in statement of profit and loss, statement of financial position and statement of cash flow.
The revenue growth has averaged 19.49% which is roughly 20% and is a very strong growth for such a big size company. A snap shot of the financial growth of the company over the period has been presented as under:
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2021 |
2020 |
2019 |
2018 |
2017 |
|||
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Earnings Quality Score |
24 |
63 |
21 |
4 |
83 |
||
|
Period End Date |
31-Aug-2021 |
31-Aug-2020 |
31-Aug-2019 |
31-Aug-2018 |
31-Aug-2017 |
||
|
Revenue |
3,910.5 |
3,263.5 |
2,733.5 |
2,417.3 |
1,923.6 |
||
|
Net Sales |
3,910.5 |
3,263.5 |
2,733.5 |
2,417.3 |
1,923.6 |
||
|
Other Revenue, Total |
-- |
-- |
-- |
-- |
-- |
||
|
Total Revenue |
3,910.5 |
3,263.5 |
2,733.5 |
2,417.3 |
1,923.6 |
||
|
19.83% |
19.39% |
13.08% |
25.67% |
19.49% |
Strong Growth Rate |
||
|
Segmental Split |
|||||||
|
Segment |
|||||||
|
Internet Retailing |
3,910.5 |
3,263.5 |
2,733.5 |
2,417.3 |
1,846.7 |
||
|
Market Services |
76.944 |
||||||
|
Growth |
|||||||
|
Internet Retailing |
19.8% |
19.4% |
13.1% |
30.9% |
20.8% |
Strong Growth Rate |
|
|
Market Services |
0 |
0 |
0 |
0 |
The company has been focusing in its core operation which has resulted in only one major segment for the company.
Profitability
The gross margin of the company has stood at 45% and has declined slightly over the years. On the other hand the operating margin of the company has improved over the years and similar impact has been witnessed in the net profit margin of the company. Thus, looking on profitability front the company has performed exceptionally well which is good sign for the company. Besides above on solvency front the ratio depicts good solvency for the company and a strong liquidity front.
Cash flow
Cash flow of the company is very good and has an increasing operating cash flow. The overall cash flow for last 5 years stood at 947.9 Million and the quality of earnings ratio has been declining which is a cause for the concern of the company. The ratio has declined from 2.03 to 1.39 which shall require good management on the part of the company.
Market Capitalization
The market capitalization of the company has been declining on account of negative sentiment in the market for the company. The market capitalization has eroded on account of pandemic and negative fear in the industry.
Conclusion
Based on above analysis, it may be inferred that the company market capitalization has declined over the period, despite strong financials and thus investing in the company may be considered. Further, a good upside is expected and investing in the company can help to earn good returns.
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[Accessed 22 December 2024].
My Assignment Help. 'Financial Analysis Of ASOS Plc Listed On London Stock Exchange, Essay.' (My Assignment Help, 2022) <https://myassignmenthelp.com/free-samples/accfin5002-advanced-international-corporate-reporting/reflective-report-for-asos-plc-file-A1D2EB7.html> accessed 22 December 2024.
My Assignment Help. Financial Analysis Of ASOS Plc Listed On London Stock Exchange, Essay. [Internet]. My Assignment Help. 2022 [cited 22 December 2024]. Available from: https://myassignmenthelp.com/free-samples/accfin5002-advanced-international-corporate-reporting/reflective-report-for-asos-plc-file-A1D2EB7.html.
