Mike Ashley took his stake in Asos to over 10 per cent as the troubled fast fashion retailer returned to profit.
The billionaire’s company Frasers Group, which counts Sports Direct and House of Fraser among its brands, now holds 10.5 per cent of Asos shares.
It marks the third time Frasers has raised its stake in a fortnight, after making two investments last week.
The swoop by Ashley will fuel speculation Asos is a takeover target after a morethan-90 per cent fall in its share price in little over two years.
‘This is a vote of confidence in Asos’ turnaround plan with Frasers Group looking to expand its presence in retail e-commerce, and potentially a step towards acquiring a controlling majority in the business,’ said Sarah Riding, retail partner at Gowling WLG.
Stake: Mike Ashley ’s company Frasers Group, which counts Sports Direct and House of Fraser among its brands, now holds 10.5% of Asos shares
‘The increase in stake follows Frasers’ typical strategy of investing in financially struggling brands and rejuvenating them.’
Shares in Asos surged 14.8 per cent, or 48.4p, to 376.4p, as investors cheered a return into the black, a sign the company was making headway in improving its fortunes.
Asos hailed a ‘return to profitability’ in the three months to the end of May and said it was on course to make £40million to £60million in the second half of the year.
It pledged to buy less stock and slash options for customers to cut costs as it booked a £291million loss in the six months to February 28, with City experts saying it needed to get its house in order.
Asos chief executive Jose Antonio Ramos Calamonte said: ‘I am confident in the direction we are going, we have restored profitability and made good progress in clearing through our inventory to generate cash.’
Last month Asos raised £75million to support its turnaround plan.
Yesterday’s update was not totally positive though, with sales down 14 per cent in the three months to May 31.
Asos, whose ownership of the Topshop brand is thought to be particularly attractive to suitors, is valued at just over £400million.
Ashley is the third-largest shareholder and his interest has pitted him against Asos’s biggest backer, Danish billionaire Anders Holch Povlsen.
The retailer’s shares soared during lockdown but have since tumbled as rising living costs squeezed its key 16-to34-year-old customer base.
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