Following today’s release of ASOS figures for the four months to 30 June 2020,
Sofie Willmott, Lead Retail Analyst at GlobalData, a leading data and analytics company, comments:
‘‘As an online pureplay ASOS has had a lot less problems to deal with than many of its store-operating competitors in recent months but despite this, it still primarily operates in the product sector that is expected to be the worst hit this year and as a fashion retailer, has weathered the outbreak well so far.
Although other clothing & footwear players have reported stronger uplifts in online performance, this has largely been channel shift as their stores closed and overall their sales performance has been a lot worse than ASOS’, with the fashion retailer’s sole channel affording it some protection as spend has transitioned online. H&M, for example, reported online sales rising 40% in the six months to 31 May 2020, however total group sales fell 22.9%. Close competitor, the boohoo group reported far higher growth (group revenue rose 44.6% for three months to 31 May 2020) prior to the allegations of slave labour which have since knocked its market value down below ASOS’.
Without the burden of a store portfolio, ASOS has been able to adjust its product offer focusing on key lockdown product categories in terms of inventory and marketing messages, and as a result achieved growth of almost 50% in casualwear, activewear and beauty. Although it would have expected pre-COVID-19 to rely more on other areas including dresses and fashion footwear, it has managed stock levels and is not writing off any inventory unlike M&S which has written off £145m of spring/summer clothing that missed its opportunity to sell while stores were shuttered. Its tactical trading, alongside the removal of ‘non strategic costs’ has boosted profitability and ASOS expects FY profits to be significantly higher than last year, also stating it will pay back previously claimed furlough support from the UK government.
The outlook is not particularly bright for any fashion brand at the moment with the threat of a potential second wave, economic uncertainty and high unemployment especially among ASOS’ young target customer base. But ASOS’ more flexible business model, its wide product range and its reputation as a fair retailer that has implemented measures to protect its staff and work with its suppliers through the pandemic, will afford it more protection than some of its competitors.”