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It has been another strong week for online fashion retailers as bored locked down shoppers look for ways to treat themselves.
Shares in online retailers Zalando and ASOS registered a spike on Thursday after the company announced it expects a big increase in second-quarter sales and operating profit due to shopping during the coronavirus lockdowns.
The sales of online retailers are expected to triple this year, accounting for 23% of European sales in 2020, levels not expected before 2024 prior to the pandemic, analysts at Bernstein said, adding the market share could reach 37% by 2030.
“The sudden closure of all apparel retail stores across all major global markets has disrupted the sector in an unprecedented way this year,” said Bernstein’s Aneesha Sherman. “[It’s] five years’ worth of growth achieved in about six months.”
Zalando, Europe’s biggest online-only fashion retailer is on track to beat market expectations of 16% second-quarter revenue growth and an adjusted operating profit of €104m ($117m).
After news of the online retailer’s performance broke out, Zalando’s shares were up 5.7% on Thursday morning, bringing their year-to-date gain to more than 40%. The stock is more than 7% higher this week.
British rival ASOS also saw a 5%, rise in the value of its shares on Wednesday when it said it would top market expectations this year after a 45% rise in first-quarter revenue. ASOS stock is up around 17% this week.
And these are just two in a long line of online retailers that have been reporting stronger-than-expected sales figures over the past quarter.
Inditex, the world’s biggest fashion retailer, which owns Zara, expects online sales to make up a quarter of its sales by 2022, compared to 14% currently, after a 95% surge in lockdown conditions in April. The stock is up 2.5% this week.
H&M reported on Monday its group sales halved from March to May and were down 30% but for the same period, but online sales jumped 36% over the same period. The stock is just under 3% higher this week.
However, it is not all doom and gloom for brick-and-mortar high street stores. Discount fashion retailer Primark, owned by Associated British Foods (ABF), emerged among the winners post-lockdown as noo-essential shops reopened in England on Monday. As of June, 112 Primark stores are currently open, accounting for 34% of total store space, as lockdown restrictions ease in Europe. This led to a 3.8% rise in the retailer’s share price following the announcement. ABF stock is up more than 5% this week.
Despite tougher social distancing guidelines and the majority of brick-and-mortar retailers still remaining closed, a good segment of the population continues to prefer shopping in-person to online retailers.
“Stores will also offer a much-needed outlet for discretionary time, money, and social interaction this year. All the other usual alternatives will remain largely off the table for a little while longer,” Bernstein’s Aneesha Sherman wrote.
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