Will Asos take on Boohoo in 2023? Analysts weigh in

Shares in two of the UK’s biggest online fast fashion retailers, Asos and Boohoo, have soared during 2023, despite being the focus of stock-shorting by bearish hedge funds.

And there is little consensus over which of the online giants has the best prospects for the remainder of the year, as both recover from a torrid 2022.

Asos shares have gained over 35% in the year to date, while rival Boohoo has seen its shares up nearly 43% over the same period. Analyst Jefferies has speculated that Asos shares may lag Boohoo Group for the rest of this year.

Asos remains sluggish in Jefferies’ Retail Trends Barometer, which monitors organic search data, app engagement and general web traffic, but stated that Boohoo posted a “marked outperformance” against Asos during January and February.

Jefferies’ Asos barometer has remained at -21% in March, while Boohoo’s barometer has risen to -1.6%. Despite this, the share prices for Asos and Boohoo Group have been broadly as buoyant as each other so far this year, although Barclays has reiterated an equal-weight rating for the Asos share price.

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And some investors are betting against the recent Asos and Boohoo shares surge.

Recent data published by the Financial Conduct Authority (FCA) showed that the Asos share price is the third most-shorted on the London Stock Exchange, with 5.7% of Asos shares sold short. Similarly, Boohoo was the most shorted stock in February, with 5.9% of its shares sold short.

That means that a significant numbers of investors are betting on a share price decline at one or both.

However, this reflects a short-term view and City analysts have predicted that Asos will return to profit at some point next year, while Boohoo Group is not expected to be profitable until 2025.

In its most recent trading update in January, Asos reported that it expected to move into profitability in H2 20223, though concerns were raised about its Christmas performance, while in March Boohoo faced a shareholder backlash over its plans to hand executives £175 million if its share price improves, although the scheme was narrowly approved.



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