It doesn’t take a genius to look at Shein’s and, latterly, Temu’s UK push and runaway sales performance, along with financial constraints caused by the cost of living, to understand why both boohoo and Asos are hurting.
In boohoo’s case, revenues for the half year to August 31st, 2023 were down by 17 per cent to £729.1m from £882.4m with a pre-tax loss of £26.4m as compared with the £15.1m loss posted for the same period last year.
Boohoo’s CEO John Lyttle says that the results showed substantial progress and that it has begun to reap the rewards of its cost-saving programme. It has adopted what it describes as a leaner, lighter, faster inventory model and is working to become more efficient, particularly in its distribution centre operations.
Meanwhile, ASOS has issued a market update in which it blames ‘the washout summer’ for the 15 per cent fall in its first quarter and that profits for the year to September 3rd 2023 have come in at the lower end of its targeted £40m-£60m.
ASOS also confirmed that it has lost c. 2.3 million customers in the past year, in all likelihood to Shein, whilst stating that this was the result of its focusing on increasing profitability rather than revenue. Most of the departing customers, it says, were the least profitable and the most likely to generate returns. Sacrificing them resulted in the profit-per-order ratio rising by 35 per cent.
Share