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spygirl

My name is ASOSocus!

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UK fashion suppliers warn of wipeout

Retailers extend payment terms and cancel orders after stores close

https://www.ft.com/content/3f5dd169-2999-40c7-9064-0d94e2f14747


UK-based suppliers to the fashion industry are warning they face being wiped out as retailers extend payment terms and cancel orders.

“The majority of major retailers are extending payment terms and there are widespread cancellations even of orders in progress,” said Nigel Lugg, chairman of the UK Fashion and Textile Association.

“Terms are routinely being taken from 60 days to 120 or even 150 days . . . it could take out a lot of suppliers.” Suppliers to New Look, a fashion chain with more than 400 stores in the UK, last week received a letter informing them that they would not be paid for orders in production.

Why the fuck bother extending credit n goods to New Look, Lord Cuntweasel, Debtenhams?

It's just a hiding to nowhere. All pain n no gain.

ACME Trouser Co is selling wholesale at £30, <insert retailer> retails at £100, pays 3, 6 months later.

Fuck that.

Its not like any retailer has shown much aptitude.

Set up website sell direct to customer at £50. Get paid within 2 weeks.

 

 

 

 

 

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Screenshot_2020-04-06 UK fashion suppliers warn of wipeout.png

This happens all the time (or at least, not infrequently) in the affiliate space. I was owed six figures for referring sales to some huge brands like M&S a couple of years ago, mostly they paid it but it took months. I am not surprised they treat their supplies like shit.

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Revenues at a certain online fashion retailer that rhymes with Basos fell off a cliff despite aggressive promo activity, we're talking 60%, 70% drop globally. It's not just the suppliers that are getting rough treatment here, their employees also got 24h to decide whether they will accept being furloughed at reduced pay or face redundancy.

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32 minutes ago, kibuc said:

Revenues at a certain online fashion retailer that rhymes with Basos fell off a cliff despite aggressive promo activity, we're talking 60%, 70% drop globally. It's not just the suppliers that are getting rough treatment here, their employees also got 24h to decide whether they will accept being furloughed at reduced pay or face redundancy.

That is as much as I thought.

And nearly all big online retailers either aren't paying affiliate commission OR they are dropping it to ~0.5%. They wouldn't be doing that if it was the land of milk and honey as portrayed by the MSM. Online shopping is no doubt up for a few select stores , but frankly looking at ASOS target customer demographic i.e. Gen-Z they are not going out much / at all now so don't need new shoes or clothes.

If/when the lockdown financial apocalypse fully kicks in towards the end of this month their sales are going to dive even more sadly.

ASOS are in a particularly bad position targeting the youth as well, these younger sorts are always going to be out the door first and be laid off first.

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https://www.retailgazette.co.uk/blog/2020/04/asos-raises-247m-in-share-placing-as-sales-drop-by-25/

// Asos’ sales plummet 25% in the most recent three weeks of trading, since lockdown came into effect
// It also raised £247m through a placing of shares to help it weather the storm of the coronavirus crisis
// For the half-year ending Feb 29, Asos’ pre-tax profit surged 653% to a record £30.1m, sales grew 21% to £1.6bn

Asos has shown that online fashion is not immune to the unprecedented problems in retail due to Covid-19, as it revealed a 25 per cent drop in sales despite record half-year profits.

For the six month period ending February 29, the online fashion retailer said pre-tax profit sky rocketed by 653 per cent year-on-year to a record £30.1 million, and revenue jumped by 21 per cent year-on-year to £1.6 billion.

At home in the UK, Asos said retail sales climbed 20 per cent year-on-year to £577.1 million, while international retail sales surged 22 per cent to £974.3 million.

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My simple mind doesn't understand how this can happen (with or without Covid-19). How does a retailer launch a lot of discounts/promotions (i.e. reduce prices), sell less items yet boost profits?

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18 hours ago, spunko said:

My simple mind doesn't understand how this can happen (with or without Covid-19). How does a retailer launch a lot of discounts/promotions (i.e. reduce prices), sell less items yet boost profits?

By timing their administration to avoid paying the suppliers?

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Posted (edited)
On 08/04/2020 at 14:31, spunko said:

My simple mind doesn't understand how this can happen (with or without Covid-19). How does a retailer launch a lot of discounts/promotions (i.e. reduce prices), sell less items yet boost profits?

ASOS has introduced a lot of cost-cutting measures and increased global reach with new warehouse in Atlanta. Combined with aggressive promos, profits are up (best half-year results ever) but margins are down. Margins getting waffer-thin has been a constant theme in recent eyars. Keep in mind that ASOS year runs from 1st of Sep so the first half-year results only cover Sep-Feb.

CEO reporting 25% drop in revenue across three weeks clearly takes hint from the mining industry, as it's a retail equivalent of grade smearing. Those 3 weeks include one week pre-covid where sales were actually up about 20% yoy, so the actual impact of the lockdown in the third week (which was the second week of lockdown) was as described in my post above.

Edited by kibuc

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