ASOS [LON:ASC] reported total sales as expected last week, while adjusted earnings have flown past market expectations and gross margins are getting back to where they should be. A missing puzzle piece is free cash flow but, if ASOS can start generating cash, there might still be life in one of the FTSE 250 index’s most disappointing stories over the past few years.
ASOS is missing out by not leaning into the marketplace model. With competitors like Boohoo [LON:BOO] rebranding under Debenhams and shifting core brands to marketplace formats, ASOS’ limited marketplace exposure is starting to look like a strategic headwind.
Marketplace models reduce risk, cut costs, and allow retailers to sell third-party products without holding inventory.
The Zalando–About You merger changes the competitive landscape for ASOS as well. This merger looks like it will strengthen Zalando’s European position and enhances its own-brand offering, putting further pressure on ASOS.
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