ShadowFall sounds like something which would haunt your dreams and news the short seller has set its sights on online retailer ASOS could certainly cause its directors and shareholders a few sleepless nights.
Known as the ‘dark destroyer’, a nickname which will only add to the feeling of distress, ShadowFall has previously targeted ASOS rival Boohoo as well as publisher Future and banking software firm Temenos. Perhaps its biggest success was in spotting the accounting irregularities at fraudulent payments processing firm Wirecard before its implosion in 2020.
AJ Bell’s Russ Mould said: “ShadowFall adds its name to a list of several other institutions targeting ASOS, with more than 10% of the company’s stock out on loan.
“It’s easy to see why corporate vultures are circling. Chief executive Jose Antonio Ramos is desperately reducing inventory and slashing costs as he looks to stem the flow of cash which is bleeding out of the business.
“The company failed to fix the roof while the sun was shining. Online retail had a good thing going during the pandemic. People had lots of disposable income, there was nowhere else to buy clothes and the thought of braving a queue at the post office meant people were put off from making returns – which are such a costly part of doing business.
“Now a lot of those factors have reversed, household budgets are tight, returns are easier to make and physical retail is now an option.
“Ramos faces a real battle to get things back on track and an increasing number of observers are now betting against him.”