ASOS Warns on Profit, CEO Beighton Steps Down

ASOS has parted company with Chief Executive Nick Beighton, as it warned that higher logistics costs and supply chain disruption could force 2022 profits to drop by more than 40%. (Reuters)
ASOS has parted company with Chief Executive Nick Beighton, as it warned that higher logistics costs and supply chain disruption could force 2022 profits to drop by more than 40%. (Reuters)
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ASOS Warns on Profit, CEO Beighton Steps Down

ASOS has parted company with Chief Executive Nick Beighton, as it warned that higher logistics costs and supply chain disruption could force 2022 profits to drop by more than 40%. (Reuters)
ASOS has parted company with Chief Executive Nick Beighton, as it warned that higher logistics costs and supply chain disruption could force 2022 profits to drop by more than 40%. (Reuters)

ASOS, the British online fashion retailer, has parted company with Chief Executive Nick Beighton, as it warned that higher logistics costs and supply chain disruption could force 2022 profits to drop by more than 40%.

The company said Beighton, who has been with ASOS for 12 years, including six as CEO, would step down with immediate effect, adding that it wanted new leadership to accelerate international growth.

The group's shares have fallen 42% this year.

It said a search had started for a successor. In the interim, finance chief Mat Dunn has taken on the additional role of chief operating officer and will lead the business on a day-to-day basis, while Katy Mecklenburgh, currently director of group finance, will become interim chief financial officer.

Beighton will remain available to the board until the end of 2021 to help with the handover.

ASOS also said that Ian Dyson, ASOS's senior independent non-executive director, will become chairman on Nov. 29, succeeding Adam Crozier, who is becoming chairman of BT.

Crozier said the management and board had spent time developing a new strategic plan to accelerate international growth.

"Key to that is ensuring that we have the right leadership in place for the next phase," he said.

The company reported a 36% rise in adjusted pre-tax profit to 193.6 million pounds ($265 million) for the year to end August after seeing "exceptional" demand in its home market.

Analysts at Jefferies said the mid-point of the new adjusted profit guidance for 2022, of 110 million to 140 million pounds, was 35% below the current consensus of 193 million pounds.

"Although many of the headwinds are understandable and, hopefully, transitory, we suspect investors will struggle to put much credibility on the mid-term targets," they said.



Analysts: Shein's Planned Hong Kong Listing to Benefit from Wider Capital Pool

FILE PHOTO: A company logo for fashion brand Shein is seen on a rail of clothing on its Christmas bus as part of a nationwide promotional tour in Liverpool, Britain, December 14, 2024. REUTERS/Phil Noble/File Photo
FILE PHOTO: A company logo for fashion brand Shein is seen on a rail of clothing on its Christmas bus as part of a nationwide promotional tour in Liverpool, Britain, December 14, 2024. REUTERS/Phil Noble/File Photo
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Analysts: Shein's Planned Hong Kong Listing to Benefit from Wider Capital Pool

FILE PHOTO: A company logo for fashion brand Shein is seen on a rail of clothing on its Christmas bus as part of a nationwide promotional tour in Liverpool, Britain, December 14, 2024. REUTERS/Phil Noble/File Photo
FILE PHOTO: A company logo for fashion brand Shein is seen on a rail of clothing on its Christmas bus as part of a nationwide promotional tour in Liverpool, Britain, December 14, 2024. REUTERS/Phil Noble/File Photo

Shein's planned listing in Hong Kong will help the online fast-fashion retailer avoid sharp investor scrutiny of its supply chains while tapping into capital from the mainland and emerging market investors, analysts said.

The Singapore-headquartered company has turned its public market debut ambitions to Hong Kong after failing to win Chinese securities regulatory approval to proceed with a London initial public offering, Reuters reported last month, citing sources.

While a listing, if successful, would be a big boost for Hong Kong, the move would cast a cloud over the company's efforts in recent years to gain legitimacy as a global, rather than a Chinese company. Shein, which sells products including $5 bike shorts and $18 sundresses, has faced political and environmental group pressure in the UK over its cotton sourcing and supply chain practices.

It has also faced allegations that its clothes contain cotton from China's Xinjiang region, where the US and NGOs have accused the Chinese government of human rights abuses and forced labor. Beijing denies any abuses.

The company, which moved its headquarters from China to Singapore in 2022, has previously said it has a zero-tolerance policy for forced labor and requires its contract manufacturers to only source cotton from approved regions.

"If it is the only option now open to them, the Hong Kong market does make sense as a place where you could list a global business with a mainland supply chain," said Eliot Fisk, a Hong Kong capital markets consultant and former JPMorgan banker.

Shein did not respond to a Reuters request for comment. Before its attempt to list in London, Shein had pursued a listing in New York. The China-founded company had also faced regulatory hurdles and pushback from US lawmakers in its attempt to list in the United States.

"Listing in Hong Kong would also likely dodge the protests and political pushback it might face in the UK," said Craig Coben, former Bank of America co-head of capital markets in Hong Kong.

While it is not known whether Shein plans to seek any waivers for a potential Hong Kong listing, several waivers, including disclosure-related waivers, can be sought by large IPO hopefuls in the Asian financial hub, according to capital market lawyers.

A Hong Kong listing would also allow Shein to eventually be added to the city's Stock Connect scheme which gives easier access for mainland and Hong Kong-based investors to buy shares on each country's respective markets more easily.

Shein would easily meet the market capitalization and other criteria for inclusion in the connect scheme and for attracting mainland investment, said Hong Kong-based advisory firm Emmer Capital Partners CEO Manishi Raychaudhuri.

There was a 255% year-on-year increase in average daily turnover in the first three months of the year in Southbound trading, mainland investors buying and selling Hong Kong stocks, the Hong Kong Exchange said in its first quarter results.

"Hong Kong would have a dominant presence of Asia and emerging market-focused investors. London on the other hand, would have a significant presence of global and developed market investors," Raychaudhuri said.

"The supply chain issues would have been a more important consideration for the latter set of investors."