Asos blames postal strike for failing to deliver expected growth
The Royal Mail strike has thwarted sales growth at Asos, the online fashion retailer, in spite of the company making alternative delivery arrangements.
In a sign of how the strikes have eroded confidence in home shopping companies and online retailers, Asos said that the threat of a national strike by 121,000 postal workers and a series of smaller local disruptions was one of the leading factors behind dragging sales growth in Britain to 23 per cent in the seven weeks to November 15.
Booming international sales have compensated for the slowdown in growth in its domestic market. In the same seven weeks last year, total sales growth, including its international business, ran at more than 100 per cent, compared with 46 per cent this year.
About 85 per cent of online retailers believe that the threat of postal strikes discouraged customers from placing orders, according to IMRG, the online retail industry body. A third of online retailers said their revenue had declined and 60 per cent said that they had found their new carrier arrangements more efficient.
The Communication Workers Union put the postal strike on hold this month after agreeing with Royal Mail to a “period of calm” before Christmas.
Nick Robertson, chief executive of Asos, said: “All the companies we speak to will do everything they can to avoid using Royal Mail. But the reality is, customers don’t necessarily join those dots together.”
He added that the weather, rising youth unemployment and credit card debt were weighing on Asos’s customers, who are aged mainly between 18 and 24. “But we still think there is opportunity in Britain: there is much more brand awareness and we can turn the volume up with regards to marketing. And, at the end of the day, the UK accounts for 1 per cent of global internet traffic,” he said.
Asos said that it had added a further 12,700 lines, taking the total to 34,000. It reported profit of £4.4 million for the six months to September 30, up 9 per cent on the same period last year, on revenues of £96.5 million, up 47 per cent.
Shoppers in America, Denmark, France, Germany and the Republic of Ireland, spurred by the weakness of the pound, have flocked to the Asos website, despite minimal marketing. The company plans to launch country-specific sites next year. Asos shares closed unchanged yesterday at 413p. It did not pay a dividend. Asos said that it intended to reinvest cash back into the business.
Source : The Times
