ASOS Results show profit increase of 329% whilst Boohoo September Results profits surged 47% to £449m
ASOS CEO Nick Beighton is concerned about Christmas despite ASOS profits increasing by 329% to £142m in the year to August 31, with group revenue up 19% to £3.26bn. His customers have seen their lives change significantly – less glam swimwear, unicorn inflatables and holidays. Hardly any weddings, cancelled holidays and virtual graduation ceremonies. Yet a lot more sales of pyjamas and leisurewear – especially tops – for all the Zoom calls.
The number of active ASOS customers rose by 3.1 million to 23.4 million as more shoppers turned to online fashion during the pandemic. Yet Beighton will know that there has been a surge in online use and browsing – UK adults spent a quarter of their waking day online during lockdown, and that has intensified the disruption from challenger brands – new and existing.
The e-tailer remains cautious due to uncertainty around golden quarter spending and further concerns about future unemployment amongst its 20- something customer.
There is much uncertainty across the fashion market regarding spending in the run up to Christmas and ASOS is famed for its partywear, which is popular with its key demographic.
Following the latest three-tier measures in effect in the UK and tighter restrictions on out-of-home socialising within retail and hospitality venues across several regions, demand for going out clothes may drastically decrease and this is something Beighton says ASOS has considered within its golden quarter buying plan,
“We detuned party gear and going-out gear, particularly dresses and shirts.
“We’ve dialled up to offer more width in casual wear, sportswear and beauty products, as well as extending our core ranges.”
The fashion e-tailer pivoted its product mix in the second half to cater to demand for popular lockdown categories like loungewear, activewear and health and beauty. With the new tier system in place, the e-tailer may see more fragmented patterns of demand as consumers in different regions find themselves socialising or at home over the festive period.
Future Fears for Generation Z
The latest ONS figures showed that between June and August 2020, 60% of people who became unemployed were aged 16-24, this is something that Beighton is “very worried about”.
Gen Z expert Jason Dorsey in an interview with CNBC talks about a defining moment for 16-25 year olds: “The pandemic impacts decisions on everything, from where they live, to cars and the type of company they would go to work for.”
And ethics is certainly something that has been a hot-topic for ASOS competitor fast-fashion pureplay Boohoo that also has benefited from a surge in sales due to Covid19.
The retailer, which also includes brands Boohoo Man, PrettyLittleThing, Nasty Gal, Karen Millen, Coast and now Oasis and Warehouse, pivoted its collections to reflect lockdown trends towards products like loungewear.
Boohoo reported that for the six months to August 31 sales increased 45% to £817m, while gross profits surged 47% to £449m.
The business has experienced a wave of negative publicity about working conditions at Boohoo’s Leicester suppliers. Experts were unsure how sales for the group might be impacted, as Gen Z have heightened awareness of the ethical and environmental practices of businesses they engage with.
Boohoo is now setting up its own factory in the UK to open next year. Additionally it is set to launch a textiles community trust to provide support and advice to garment workers in Leicester.