Online fashion stocks outperform high street rivals
Shares in online fashion retailers like Zalando, Boohoo and ASOS continue to outperform their high street rivals, with the coronavirus pandemic accelerating the rise in ecommerce sales.
On Thursday, Zalando saw their stock rise 7% after the German fashion retailer told investors that it expects a significant increase in second quarter (Q2) sales and operating profit due to government-imposed lockdown restrictions helping shift consumer spending online.
ASOS saw its shares climb 4.5% in today’s session, with fellow online fashion retailer Boohoo trading 38% higher year-to-date – outperforming the broader market with the FTSE 100 down 18% over the same period.
High street rivals shares struggle amid Covid-19
High street fashion retailers shares have performed dismally in comparison to their online counterparts, with Next, Hennes & Mauritz AB (H&M) and Zara-owner Inditex all down more than 22% year-to-date.
Online fashion is set to triple this year, accounting for around 23% of all European sales in 2020, with the shift away from the high street accelerated by the viral outbreak, according to analysts at Bernstein.
‘The sudden closure of all apparel retail stores across all major global markets has shaken up the channel mix in an unprecedented way this year,’ Bernstein analyst Aneesha Sherman said in a note. ‘(It's) five years' worth of growth achieved in about six months.’
Boohoo adds Oasis and Warehouse brands to its portfolio
Boohoo once again has swooped in to acquire struggling high street fashion brands Oasis and Warehouse for £5.25 million.
Boohoo told investors about its purchases after announcing that its online sales soared 45% in the three months to May, driven by a rise in demand for athleisure wear amid the lockdown.
The online retailer added the two high street brands to its ever-growing portfolio that includes PLT, Nasty Gal, MissPap, Karen Millen and Coast.
Boohoo was able to pick up Oasis and Warehouse at a significant discount, with the pair going into administration in April – joining a growing list of failed high street retailers pushed to the brink due to a dramatic shift in consumer spending habits accelerated by the Covid-19 pandemic.
Analysts at Bernstein expect the high street shake-out to continue, but admit that consumers still have a passion for fashion in stores because shoppers still enjoy seeing and feeling products before purchasing them.
‘Stores will also offer a much-needed outlet for discretionary time, money, and social interaction this year,’ Sherman added. ‘All the other usual alternatives will remain largely off the table for a little while longer.’
How to trade stocks with IG
- Create an IG trading account or log in to your existing account
- Enter ‘Boohoo’ in the search bar and select it
- Choose your position size
- Click on ‘buy’ or ‘sell’ in the deal ticket
- Confirm the trade
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets