Cost of living crunch for 20-somethings hits Asos
YOUNGER shoppers are being hit hardest by the rising cost of living, fashion retailer Asos has warned, as it slashed profits and sales forecasts.
Shares in the company plunged by more than a fifth after Asos said 20-somethings have been among the first to feel the impact of inflation.
Finance chief Mat Dunn said: “They are more exposed to it because their level of discretionary income is lower than older shoppers, rents are going up significantly, they will be exposed to filling up their cars and higher fuel and food prices.”
Rival Boohoo also reported a slump in sales. Both businesses are suffering from higher-than-usual return rates as customer budgets are squeezed.
“To some degree it is, ‘I’ve bought it, I look at my bank balance and then I can return it if I don’t have as much money as I thought I’d have [at the end of the month]’,” Mr Dunn said.
Asos cut its guidance in anticipation of customers reining in spending. The company now expects full-year sales to grow by 4pc to 7pc, with underlying pre-tax profits of between £20m and £60m. Last year it made profits of £194m and in January predicted profits of between £100m and £140m this year.
Boohoo, meanwhile, reported an 8pc slump in revenue to £445m in the quarter to the end of May, compared with the same period last year.
The company, which also owns Karen Millen and Coast, said it was considering charging for returns as it grapples with higher rejection rates and an increase in shipping costs.
Boohoo shoppers, typically between the age of 16 and 24, are less likely to be affected by the cost of living pressures as they tend to live at home, it said.
Chloe Collins, a retail analyst at Global Data, said: “With Boohoo releasing a sombre set of results and Missguided falling into administration, fast-fashion seems to be losing its shine as financial uncertainty means keeping up with the latest trends is no longer a priority for many shoppers.”
Asos also shook up its leadership, with commercial chief Jose Antonio Ramos Calamonte promoted to chief executive and non-executive director Jorgen Lindemann named chairman.