Three to sell

Asos

The Times

Fast-fashion clothing retailer Asos is battling supply-chain issues, higher labour and freight costs, and competition for everdwindling consumer spending power. The company saw an 87% decline in pretax profits for the six months to the end of February 2021, and its shares have crashed 70% over the last 12 months. The stock is almost as cheap as it’s ever been, but analysts expect the outlook to worsen. Avoid. 1,612p

Kingfisher

The Sunday Times

While Wickes is “nailing it”, rival Kingfisher – which owns B&Q, Screwfix and Castorama in France – has seen its shares drop 25% the past year. The group is struggling with higher shipping expenses, inflationary energy and material costs, and the impact of new lockdowns on Chinese manufacturing. It won’t be able to pass all these costs to customers, so analysts are predicting pre-tax profits will fall from £949m last year to £769m in 2022. The company is struggling to “right size” its physical stores, while online orders still account for only 18% of sales. A forecast p/e of ten is too high. Sell. 259p

Ocado

Investors’ Chronicle

Online food retailer Ocado often looks more like a Silicon Valley tech firm than a grocer. The company requires ceaseless investment and has only turned a full-year profit three times since it was founded: it posted a £177m pre-tax loss for the 12 months to November 2021 and estimates its profit “lift off” to hover as far in the future as 2025. Capital expenditures have quadrupled since 2018, to £680m for its last financial year. The pandemic boom in home shopping is wearing off: sales fell by 5.7% for the 13 weeks to 27 February as consumers ventured out. Sell. 1,244p