Seymour Pierce downgraded its stance on online fashion retailer ASOS (ASC) from 'buy' to 'hold' after viewing the stock as "fairly valued". It notes that the company has "to make up a lot of lost ground in the second half" of 2009, and interim profits are only expected to increase by 6% to 4.3 million pounds. A growth in sales of 47% in the six months to 30th September was offset by a 3% decline in margins due to more branded goods being sold than own-brands. Mild weather in October and November has meant that the autumn ranges have not been selling as planned. The broker expects the company to have to resort to discounting as a result of increased bought-in stock levels and competition from Tesco who have started online clothing sales.
ASOS shares have fallen to below £4