Britain's largest online fashion retailers, Asos and Boohoo, were not spared by the global inflation crisis.
The two companies have reported slow profits, particularly with Boohoo logging its very UK sales decline in its history. Bloomberg noted that this could indicate that the country's cost-of-living problem has been affecting customers and the online fashion retail realm in general.
The London-based company Asos has cut its profit and sales forecast. At the same time, Boohoo attributes its decline in sales due to customers buying less online and returning more items ordered from them.
Bloomberg also reported that in early London trading, Boohoo's stock jumped down to approximately 11 percent. Asos, on the other hand, saw its shares plunging more than 16 percent.
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Former COVID-19 Lockdown Winners
Asos and Boohoo, which were once hailed as COVID-19 lockdown winners, have stumbled as regular shopping tendencies returned and supply chain issues continue.
The retailers are also met with fierce competition from fashion stores such as the bargain startup SheIn, as buyers slash down non-essential purchases with the inflation persisting.
Asos' chief operating officer, Matthew Dunn, stated that the company has noticed that customers have been wary of their money since their petrol expenditures have increased. They're spending more on food and other necessities.
However, Dunn is optimistic that market behavior could still normalize.
According to a trading update, on Thursday, June 16. Asos now anticipates sales to climb 4% to 7% for the full year, down from its previous projection of 10% to 15% in January.
The company estimates adjusted pretax earnings of £20 million to £60 million, down from £110 million to £140 million in previous guidance.
Asos noted that a considerable increase in consumers returning clothing in the United Kingdom and Europe had harmed net sales, indicating that shoppers' behavior is being shaped by inflation. Asos cautioned in April that increasing inflation and disturbance from Russia's war in Ukraine could jeopardize its full-year earnings target.
A trading report also indicated that Boohoo's performance was harmed by higher returns, with sales declining 1% in its home market and 8% overall in the first quarter.
The drop was attributed to difficult comparisons with the previous year when individuals were online during lockdowns and returned fewer products.
At the time, the retailer reported that UK sales began to improve month over month, and it held to its previously revised revenue growth projection of low single digits for the whole year.
Last month, Boohoo, which also owns PrettyLittleThing and Nasty Gal, cautioned that sales growth in the first half could slow. It has already lowered its sales forecasts twice this year and is working to rebound from a labor supply crisis in 2020 that prompted governance changes.
According to Bloomberg, British retailers are facing a tough day after Halfords shares fell to their lowest intraday level since March 2020, after the automotive and cycling retailer warned of rising prices and falling consumer confidence.
This article is owned by Tech Times
Written by Joaquin Victor Tacla
