Shares round-up: investors pile into Asos and On The Beach

Early signs of a return to growth at ASOS (LSE:ASC) kept its shares on a roll today as the fashion business joined holidays operator On The Beach by upgrading guidance in year-end updates.

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Asos shares jumped by 45.5p to 475.5p, representing the former FTSE 250 company's highest level in over three years and more than double their level in April.

The latest rise came as Asos said gross merchandise value (GMV) improved every quarter in the 2026 financial year, culminating in low-single digit growth in the fourth quarter.

Progress across core markets included positive second half growth in the UK and Germany and fourth quarter growth in the United States as Asos recorded total active customers of 16.4 million by the year-end.

GMV for the full year declined 5% but with womenswear 3% higher, with the latter figure up 8% in the second half amid strong growth by own brands including Topshop and Arrange.

Other positives in today's update included an adjusted gross margin of more than 50%, which was above the guidance range of 48-50% and the company's 50% medium-term target.

This followed improved sourcing and better full-price sell through, meaning that adjusted earnings in results on 5 November will be at least 25% higher and above the mid-point of the company's guidance range of between £150 million and £180 million.

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Asos ended the year with net debt of about £110 million, which is down from £184.7 million the year before. This points to a lease adjusted debt-to-earnings ratio of about two times, which is a significant improvement on the 7.5 times of two years ago.

The transformation strategy has seen investment in the customer experience through a new app, alongside two major refinancings and a sharper focus on operating costs.

Chief executive José Antonio Ramos Calamonte said: “The business is demonstrating consistent delivery, and importantly, our recovery is broadening despite the macro backdrop.”

The upgrade and first sign of GMV growth at group level in four years prompted City firm Berenberg to increase its price target from 600p to 750p. It also lifted its adjusted earnings estimate by 4% to £165.1 million and by 2% for the new financial year.

Berenberg said: “Asos has earned a new place in the market and we envisage further profit recovery in the years ahead.”

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Stronger earnings guidance also helped On The Beach Group (LSE:OTB) to rally by 9.5p to 172.2p, although the shares remain well below the 219p seen in January.

The UK's largest online package holiday company sees adjusted profits in the top half of its forecast range of between £18 million and £25 million when it posts results on 1 December.

Summer bookings were 4% stronger than a year earlier, having been 1% behind at the time of interim results on 12 May. The momentum has continued into the new financial year as bookings in the last eight weeks are up 17%.

Profit guidance for 2026/27 stands at between £28 million and £35 million, although the company is mindful of the Middle East conflict and broader UK consumer backdrop.

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Chief executive Shaun Morton said investments in the company's technology, product offering and brand had resulted in market share gains and deeper customer loyalty, with bookings from repeat customers up 18%.

Peel Hunt, which has a price target of 250p, sees scope for material upside given that the guidance is likely to be based on the current challenging conditions continuing.

It added: “The impact of macro challenges is concealing what On The Beach's technology platform is capable of after material investment. More destinations, flights and hotels (and cruises) could drive medium-term growth.”