Two of Britain’s biggest online fashion retailers have reported slowing sales in a fresh sign that the cost-of-living crisis in the UK is denting consumer confidence.
sos Plc significantly downgraded its profit and sales guidance while Boohoo Group Plc recorded the first UK sales decline in its history as shoppers buy less online and return more goods.
Previously considered lockdown winners, Asos and Boohoo have struggled as normal shopping trends return and supply chain woes persist. Fast-fashion retailers are also being hit by intense competition and rising costs, at the same time as shoppers cut back on non-essential items with bills rising. Cut-rate discount upstart SheIn has been enjoying exponential growth, while Zara owner Inditex SA and Hennes & Mauritz AB are seeing strong demand.
Asos now expects sales to grow 4pc to 7pc for the full year, down from previous guidance in January of 10pc to 15pc, according to a trading update on Thursday. The company expects adjusted pretax profit of £20 million ($24 million) to £60 million, compared with prior guidance of £110 million to £140 million.
Asos said that net sales have been impacted by a significant rise in consumers returning garments in the UK and Europe, a sign of shoppers getting pickier under the pressure of rising inflation. In April, Asos warned that its full-year earnings goal was at risk from accelerating inflation and disruption from Russia’s war in Ukraine.
The company separately named Jose Antonio Ramos Calamonte as chief executive officer. He is currently chief commercial officer of Asos. Jorgen Lindemann has been appointed chairman.
Boohoo reported a 1pc fall in its British home market and an 8pc drop in overall sales in the first quarter, according to a separate trading update. Boohoo blamed the fall on tough comparisons with last year when people were spending more online during lockdowns. It said UK sales did improve month-on-month during the period and returned to net growth in May and it expected further improvement during the rest of the year.
Boohoo stuck to its previously lowered guidance for the full year of low single digit revenue growth, which would be the smallest increase since its initial stock sale in 2014. Boohoo has also predicted that profitability will be much lower than its historical average.
Boohoo warned last month that sales growth may grind to a halt in the first half as customers coming out of lockdown return more clothes and the nascent US business battles with supply chain disruption and freight costs. The company, whose other brands include PrettyLittleThing and Nasty Gal, already cut its sales projections twice last year and is recovering from a labour supply scandal in 2020 which sparked governance changes.
Boohoo shares have fallen 47pc so far this year while Asos has dropped 51pc.