(BFM Bourse) – Fast fashion specialists Boohoo and Asos had a difficult week on the London Stock Exchange. Both groups are under pressure with the purchasing power crisis in the UK.
Boohoo and Asos shares suffered a difficult week on the London Stock Exchange after the two online retailers of clothing labeled as “fast fashion” published lower results and mixed forecasts, in the midst of a crisis in purchasing power in the world. UK. On the heels of their respective releases on Thursday, Boohoo fell 11.2% while Asos dropped 32.5%.
These groups selling low-cost and unsustainable clothing exclusively online also dragged down traditional ready-to-wear players such as Next (-4.6%) and JD Sports Fashion (-7.05%) in their fall. .
Asos’ year-on-year sales for the quarter ended May ended at £983.4 million, due in part to a high rate of product returns and refund requests, a problem that also affects its rival Boohoo.
Problems that follow
This is the reflection of “inflationary pressures on consumers which harms the profitability” of the group, underlines Asos in a press release Thursday, announcing also to promote its commercial director, José Antonio Ramos Calamonte, to the post of CEO in place of Nick Beighton, who resigned with immediate effect.
Boohoo sales for their part fell by 8% over one year for the three months from March to the end of May, affected in particular by an unfavorable comparison effect. In addition, the group suffers from global supply chain issues.
The worst of the “supplier scandal” which had affected Boohoo, accused of wages well below the mandatory minimum and deplorable working conditions, “seems to be over, but the problems seem to be linked”, remarks Sophie Lund-Yates, analyst at Hargreaves Lansdown.
Fewer outings and therefore fewer clothes?
In addition, not only are consumers returning to stores more than ordering online since the end of health restrictions, but they are reducing their spending in the face of runaway inflation.
Sales are certainly up 75% compared to before the pandemic, but “the hardest work begins now”, underlines the analyst.
She notes that “fast-fashion”, namely fashion brands such as the British Boohoo and Asos but also the Chinese Shein, with their abundant supply and renewed at a dizzying pace, should suffer “from the bite of inflation “. “While Boohoo dresses are affordable, the occasions for which they are purchased, i.e. going out or on vacation, will no longer be relevant if this context continues,” she concludes.
(With AFP)
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