BUSINESS LIVE: Aston Martin lifted by DB12; Next ups profit expectations; Asos sales to weaken

Richard Hunter, head of markets at Interactive Investor:

‘The improved quarterly performance and volatility within sales performance is one that Next attributes to changing weather conditions over the period and not to any noticeable change in consumer behavior.

“Yet this remains a looming large for the retail sector given the uncertain economic outlook, especially for companies like Next, which have eschewed markdowns on their products in favor of a concentration on full-price sales.

‘The shares are certainly on a roll given their recent ability to cloud expectations, rising 40% in the past year, compared to a 2% gain for the broader FTSE100. However, there is still work to be done as the two-year performance remains negative, with the shares down 14% and a long way from the peak of £81 reached in November 2021.

‘Nevertheless, Next has long been regarded as a well-oiled machine with a determination to make progress, and a recent upgrade in market consensus to a cautious buy reflects the rising valuation of the prospects.’

Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club:

‘Last year was another annus horribilis, but it would always remain that way. You can’t do major surgery on a broken company without suffering a lot of pain. ASOS is still in intensive care, which means the next year will likely be very painful as well.

The new CEO of ‘ASOS’, José Antonio Ramos Calamonte, seems to be taking the right measures to change the company. This includes reducing inventory and promotions, lowering costs, prioritizing cash and transforming the culture. This has helped stem the bleeding, but has led to an inevitable acceleration of sales declines, exacerbated by a weak consumer environment.

‘Stopping the decline in turnover and allowing turnover to grow again will be the biggest challenge for Mr Calamonte. He is targeting a return to growth in FY25, but in an intensely competitive sector, investors are unlikely to believe it until they see it.

‘Overall, ASOS is still in a huge challenge and it seems unlikely that it will ever rediscover its former glory. But at least the country now has a leader who recognizes these challenges and takes decisive action, giving the country a chance to return to growth in FY25.”

Asos forecast another year of declining sales in 2024, but the budget fashion retailer said its turnaround plan was taking shape and growth would return the following year.

CEO Jose Antonio Ramos Calamonte took over in June 2022 with the aim of reviving Asos, which struggled as people returned to stores after the pandemic, while its own operational issues hurt performance.

Asos posted a pre-nasties loss of £29 million for the year to September 3, just behind the consensus forecast of a £24 million loss.

It expects revenue to decline 5 to 15 percent in 2024, but return to core growth in 2025.

Odey Asset Management is closing its doors for good – less than six months after disgraced founder Crispin Odey faced new allegations of sexual misconduct.

The 32-year-old company said it would wind down after moving its funds and managers elsewhere.

This includes closing both Brook Asset Management and Odey Wealth, the website said.

Next has raised full-year profit forecasts for the fourth time in six months, following a better-than-expected 4 percent rise in full-price sales in the third quarter.

The group, which trades from around 460 stores in Britain and Ireland and has an online presence in more than 70 countries, is often regarded as a useful indicator of how British consumers are faring.

Next now expects to post pre-tax profits of £885 million for the year to January 2024, up from its previous guidance of £875 million and last year’s £870.4 million.

Losses at Aston Martin were higher than expected in the third quarter as ‘exceptional demand’ for the new DB12 sports car was frustrated by temporary production problems.

The luxury car maker started deliveries of its next-generation sports cars last quarter and expects volume to reach 6,700 units in 2023, up from a previous forecast of around 7,000 units.

“Given the initial delays we experienced in ramping up the DB12 in the third quarter, we have marginally revised our volume guidance for the fiscal year as the impact limits production capacity for the full year,” the company said in a statement.

Aston Martin, which maintained the remainder of its 2023 guidance, reported an adjusted operating loss of £48.4m on sales of £362.1m in the three months to September 30.

This was worse than analyst forecasts of a £38 million loss on revenues of £370 million.