Retailer Frasers Group (LON: FRAS) has taken advantage of the recent slump in the online fashion retailer ASOS (LON: ASC) share price to increase its stake from 5.1% to 7.4%.
Frasers Group has built up stakes in other retailers and it does not mean that it is interested in bidding for ASOS. It may just be seeking a turn on its investment.
On 11 May, T Rowe Price reduced its stake in ASOS from 5.98% to 3.23%. Since the beginning of May, the share price has fallen from 736.8p to 382p at one point. Today, the share price recovered by 7.1% to 427.1p.
On 22 February 2022, ASOS switched from AIM to a premium listing after more than 20 years on the junior market. Prior to leaving AIM, the share price was 1950p.
After a boost from Covid lockdowns, trading has got tougher for ASOS and there have been management changes in recent years. The focus has changed from growth to profitability.
There has been negative broker coverage since the recent results. The interims show a move from an underlying pre-tax profit of £14.8m to a loss of £87.4m on revenues falling from £2bn to £1.84bn.
A major concern is that ASOS may require a cash injection. Net debt increased to £431.7m at the end of February 2023 and cash outflows look set to continue.