The Week Ahead: City expects fashionable 45 per cent rise in ASOS profits
Monday 07 June 2010
The city is looking forward to news of strong profits from the online fashion retailer ASOS, which is due to publish its full-year figures on Wednesday.
Analysts anticipate news of £20.5m in pre-tax profits, up 45 per cent on the year, while earnings per share are expected to rise to 18.22p per share. The company has already reported a 35 per cent rise in total sales in the year to the end of March.
Retail sales were up 38 per cent, with the UK booking a gain of 23 per cent and international retail sales swelling by 101 per cent. Trade in Asos's current financial year has also been promising, with retail sales for the first 19 days of April up 56 per cent.
Taking its cue from recent strength, KBC Peel Hunt recently upped its estimates for the year ahead, targeting £28.2m in pre-tax profits for 2011.
The broker said recent efforts should boost key indicators, adding: "The move to free returns and free delivery, coupled with the membership scheme 'ASOS Premier' are driving a fuller average basket
"With management also more able to focus on operational efficiency, we would expect cost ratios to improve, with some modest [improvements in the margins on earnings before interest and tax] for the year ahead."
As for the share price, Panmure Gordon reckons that despite rising steadily in recent months, ASOS may well continue to make gains as investors are lured by trading trends and the possibility of stake-building by Bestseller, the Danish supplier of youth brands which is understood to have picked up a 4 per cent interest recently.
"In the past, the owner and chief executive of Bestseller, Andres Holch Povlsen, bought through a financial venture company a 20 per cent stake in one of its Indian clothing suppliers at a significant premium," the broker said. "It is not beyond the bounds of possibility that Bestseller might build on its 4.02 per cent stake in ASOS."
The computer services group Phoenix IT is due post its annual results this morning, and given the in-line update back in April investors are unlikely to be greeted by any surprises.
Beyond the headline figures, Numis, which is forecasting £29m in pre-tax profits, just below a consensus estimate of £29.6m, is looking forward to news of "a significant jump" in annualised contract values (ACV) in the Phoenix IT services division, and "signs of acceleration" in ACVs in the business continuity division.
The hosting business should continue to show solid growth, the broker said, adding: "We are also looking for further commentary on profitability in Phoenix IT services."
Results/Updates: EV Technologies, Latchways, UBC Media, Workspace, Vectura and Phoenix IT.
Other: Prudential's annual general meeting.
The engineering specialist Hyder Consulting could prompt some in the City to revisit their numbers when it posts its full-year results.
Numis, which upped its forecasts for the third time in six months when Hyder issued its pre-close update in March, said its estimates still did not look aggressive because they assumed that there would be no benefit from foreign-exchange moves and there was "potential upside from continued international contract wins".
Results/Updates: Renold, Carclo, Umeco and Hyder Consulting.
Results/Updates: Intelek, First Property, Focus Solutions, Hampson and ASOS.
KBC Peel Hunt is looking forward to news of £116m in pre-tax profits when the retail group Halfords issues its full-year figures later this week. If achieved, the figures would be at the top end of the company's guidance of profits before tax and one off-items of between £114m and £116m. "In an uncertain consumer environment, Halfords' core operations remain relatively defensive," KBC said, repeating its "buy" view in a preview published at the end of last week.
Results/Updates: Premier Farnell, PZ Cussons, Wincanton, Home Retail Group and Halfords.
Numis is anticipating a 12 per cent rise in pre-tax profits when the pubs group Fuller, Smith & Turner issues full-year results. That would bring the figure to £25.6m, against consensus hopes of £25.2m.
"We believe the risk to 2010 numbers and 2011 forecasts is on the upside," the broker said. "Managed pub like-for-like sales were up 2.8 per cent after [the 44 weeks to the end of January].
"We believe the level was held in the middle of the fourth quarter, despite tougher comparatives and the VAT increase [at the beginning of the year], supported by operational initiatives, investment and a good London market."
Results/Updates: Fuller, Smith & Turner.
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