Asos booms in lockdown: Sportswear and fewer returns help power huge sales surge at the UK’s online fashion giant
Shares in Britain’s biggest online fashion store soared yesterday as sales boomed in lockdown and consumers returned fewer clothes.
Shoppers at Asos bought more comfortable sports gear, rather than dresses and suits, meaning that clothes ordered online are more likely to fit.
Make-up and skincare products have also been popular. Customers wanted to look good on video conferencing calls with friends and pamper themselves while stuck at home.
Shoppers at Asos bought more comfortable sports gear, rather than dresses and suits, meaning that clothes ordered online are more likely to fit
The retailer said long queues at post offices to take back unwanted goods have also encouraged shoppers to make ‘more deliberate purchases’, leading to a ‘significant and sustained reduction in returns rates’ since April.
Asos has struggled with large volumes of returns in the past, which hack away at its margins, and even threatened to blacklist serial returners.
Demand has also been stronger than anticipated during lockdown, even after high street rivals reopened.
The company upgraded its profit forecasts to between £130million to £150million for the year to the end of August, eclipsing the £58million figure that analysts have been predicting.
Sales are expected to be around 18 per cent higher this year compared to last, it said.
Shares jumped as much a 10 per cent yesterday morning when the buoyant trading statement was released.
By the time markets had closed they were up 13.3 per cent, or 560p, to 4780p on the news
Asos upgraded its profit forecasts to between £130m to £150m for the year to the end of August, eclipsing the £58m figure that analysts have been predicting
High street stores have shed tens of thousands of jobs since the start of the crisis as customers move online and avoid shops.
But at the same time thousands of jobs have been created for workers in warehouses, delivery drivers and logistics technology.
Last month the fast fashion industry was heavily scrutinised after a sweatshop slavery row erupted over conditions in Leicester factories.
Two of Boohoo’s suppliers were accused of paying as little as £3.50 to £4 an hour to workers producing its clothes.
Philip Dunne, chair of the MPs’ environmental audit committee said it was ‘shameful’ it had taken so long for Boohoo to be ‘taken to task for turning a blind eye’.
Its share price collapsed 49 per cent to 212p, but it has since recovered some of its losses after announcing an independent investigation into its supply chain.
Boohoo will provide an update on the findings of the report with its half-year results on September 30. The company received a boost from Asos’s results yesterday, with shares increasing 6.7 per cent, or 20p, to 317.9p.
Asos said it was reviewing its operations in Leicester to avoid being dragged into the crisis, and chief executive Nick Beighton visited his Leicester suppliers to inspect their factories on July 17.
The £4.4billion company has 173 suppliers at 900 factories in 24 countries, including seven in the Leicester area, working across 30 sites.
One of those factories has been assigned the most serious ‘red critical’ status by internal auditors at Asos, suggesting there were significant gaps in management systems or that workers’ welfare was at risk.
Between 2013 and 2018 Asos pulled out of 23 factories in Leicester due to a lack of business and concerns over working practices.
And an audit report from May 2018 revealed that a quarter of Asos suppliers, including seven in the UK, had committed major ethical breaches. It uncovered problems in 185 sites around the world, around a quarter of suppliers it inspected.