Thomas Woods reports on online retailer ASOS and its recent growth, as well as the company’s potential issues.
One of the UK’s largest online retailers, ASOS, have reported a 36% rise in full-year profits as of the end of August. The exceptional shopping demand of the British public during the COVID-19 pandemic has meant that the online retailer was one of the go-to places to purchase during the past year and a half.
This boost in sales was said to have come from a £67 million spend by the British public on leisurewear to use at home during the several lockdowns. The overall revenue of the company also rose 22% to £3.9 billion as the active base of customers increased to 26.4 million, an increase of 13%.
Despite this growth within the company, as the country comes out of the pandemic it is expected that the habits of the public will return to pre-pandemic behaviour. This includes buying more sustainable vintage clothing that looks to fill the popular demand for authentic ’90s and Y2K fashion. Additional supply chain issues and the resignation of CEO Nick Beighton could further a potential dip in profit. It is suggested that these stumbling blocks could reduce 2022 profit by over 40%.
As ASOS’s pandemic performance soared, the growth of the company began to slow this past July. CEO Beighton would not commit to the company over the next five years, with ASOS stating that his departure would allow them to find a new leader that would accelerate international growth.
Clothing rival Boohoo also reported a 12% fall in shares as growth slowed. The impact of Brexit, vintage clothing, and supply chain issues on fast-fashion companies may be a consistent trend over the coming year.
In reference to expanding internationally, chairman Adam Crozier stated that “If we do the right things and we execute there, then the share price should take care of itself”.