Business

Storm Asos batters UK retail sector

Asos suffers November ‘bump in the road’ – for others the outcome may be much worse

Asos said November sales were ‘significantly behind expectations’. Photograph: Suzanne Plunkett/Reuters

Tue Dec 18 2018 - 05:25

After Storm Deirdre, along came Storm Asos. Hideous weather battered Christmas takings on Saturday, traditionally one of the busiest shopping days of the year, leaving no shortage of gloom across the retail sector come Monday morning. But there was to be no let-up from the bad news.

In a miserable trading statement, online-only fashion retailer Asos warned that sales in the “very material month” of November had been “significantly behind expectations”. Its update, which triggered a 40 per cent plummet in its share price and some unpleasant drops for other retail stocks, is notable because it comes at a time when the retail business is undergoing a structural shift in favour of pure-play ecommerce operations just like Asos.

If even it is suffering, then what does that mean for bricks-and-mortar shops?

Nothing good. Sports Direct owner Mike Ashley set the scene in no uncertain terms last week by highlighting "unbelievably bad" November trading. "No one could have budgeted for that. Retailers just cannot take that kind of November. It will literally smash them to pieces," he said.

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Asos chief executive Nick Beighton did not go that far, suggesting that "this is just a bump in the road" for Asos. But, as Ashley hints, other retailers may be rather less equipped to deal with any bumps right now.

Weak consumer confidence in Britain is the critical factor. In Ireland, sentiment improved in November. But the shadow of Brexit lingers over both economies, and with many of the UK names occupying retail space here, if there is a day of reckoning come January, Irish shoppers will notice it, too.

Among clothing retailers, there is another factor, less spoken about, but with the potential to constrain any recovery: while cosmetics sales have boomed, the frenzy for a rapid wardrobe turnover isn’t as intense for today’s millennials as it was for the Noughties twentysomethings. Fashion isn’t in fashion the way it used to be.

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