Online fashion stocks outperform high street rivals

Shares in online fashion retailers like Zalando, ASOS and BoohooBoohoo 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.’

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