The Pale Star of Asos, ex-online clothing star

It had to be the story of one of the winners of the pandemic, who profited from the explosion in online sales. Instead, the clothing website Asos is going through a serious crisis, after the sudden departure, Monday, June 11, of its managing director, Nick Beighton, without a replacement, and the publication of a warning on its results. The stock slipped 13.4% on Monday, bringing the year-to-date decline to 50%.

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Asos, the third largest clothing brand in the United Kingdom, but entirely online, and which is also present in France, suffers both from the many logistical problems of this end of the pandemic and from the frenzied competition between the websites of the United Kingdom. ‘clothing.

Like some of its competitors, including H&M, Nike and Adidas, the group is worried about manufacturing conditions in Asia and the lengthening of delivery times. The very strict confinements imposed on Vietnam this summer, leading to the closure of factories, had very heavy impacts on the entire sector. Asos also cites the additional cost caused by Brexit, with significant red tape for its trade between the United Kingdom and Europe. As a result, the group warned that its profit could be cut by more than 40% in 2022.

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Still, these difficulties are mainly problems of the rich. “The business model of Asos is that of the winners of the health crisis, in the same way as that of Zalando or Amazon”, notes Antoine Fraysse-Soulier, head of market analysis at eToro, online broker. Between September 2020 and August 2021, its net income increased by 36% last year. And its activity jumped 20% to reach 3.91 billion pounds, or 4.6 billion euros.

A too British brand

The real problem, from an investor perspective, is that Asos also suffers from being too British. Because, despite a presence in 200 markets and availability in ten languages, the site founded in 2000 achieves 80% of its sales in the United Kingdom. “Asos did not succeed in the United States”, reports M. Fraysse-Soulier. And, in Europe, its market share is low. In France, where the online clothing sales market is dominated by the German Zalando and the American Amazon, the British site “Loses ground when others gain”, suggests Hélène Janicaud, head of studies at Kantar.

The site is now struggling to attract young people under 25, who represent half of its customers. Its market share in France is only 1.8%. Its audience has stagnated at around 3.4 million unique visitors per month, according to Médiamétrie. Asos ranks far behind the used products site Vinted with 15.5 million unique visitors per month, but also Shein (8.3 million unique visitors). The Chinese site is now the leading player in the women’s ready-to-wear segment, ahead of Kiabi, in France, according to Kantar. “Shein competes with Asos”, observe Mme Janicaud. The offensive of the websites of the brands of the Spanish group Inditex – that is to say Zara, but also Pull & Bear and Bershka, which are aimed at the youngest fashionistas – is also hurting him.

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