Online fashion giant ASOS has been overtaken in terms of stock market value by its smaller, cheaper rival Boohoo.
According to current share prices Manchester-based Boohoo is now worth £2.4bn while ASOS is worth £2.16bn.
Boohoo has always trailed ASOS in terms of market value since its launch on the stock market in 2014 – apart from one day before Christmas – but has been holding its lead over its London-based rival for a week now.
ASOS shares were hit this week after UBS analyst Olivia Townsend downgraded the stock to “neutral” citing margin pressures as a concern. The company was hit by poor trading during the Black Friday period last year and had trouble embedding its new warehouse in Atlanta, which impacted US sales. The analyst also noted greater promotional activity in recent months.
London-based ASOS was founded in 2000 by entrepreneurs Nick Robertson and Quentin Griffiths and floated on AIM two years later. It began life replicating fashions seen on celebrities but went on to ride the fast-fashion wave of the 00s and was a trailblazer in terms of its use of content and social media.
It now styles itself as the destination for fashion-obsessed 20-somethings and sells a mix of its own labels and other brands.
Boohoo was founded in 2006 by Mahmud Kamani and Carol Kane and was born from a business that formerly supplied wholesale clothing to other brands. It focuses on its own label products and is known for its links with celebrities, influencers and reality stars. Its client base is slightly younger than that of ASOS starting at 16 and moving up to 30.
Kamani’s son Umar established Pretty Little Thing, which is now part of the group and its fastest growing brand, and it also acquired US fast fashion brand Nasty Gal. While its cheap clothing has come under criticism for encouraging a throw-away culture, from a business perspective analysts have praised its integrated approach as it directly procures and manufactures much of the clothing it sells, giving it more control.
Last year Boohoo achieved annual sales of £579.8m with £355.6m generated in the UK. It is growing at a rate of 32% and it generated profits of £33m. ASOS is far larger with sales of £2.35bn and around £861m generated in the UK. Its growth rate last year was 27% with pre-tax profits of £102m. However its half-year profits plunged 87% to £4m it revealed in February.
Retail analyst Richard Hyman told The Times: “Asos’s honeymoon period is over”.