Online Fashion Retailers ASOS, Boohoo Weighed Down By Returns

PARIS, France - British online fashion retailers ASOS and Boohoo cautioned on Thursday that they are being hurt by rising product returns as consumers battle inflation and shift to pre - pandemic behaviour, hammering their shares.

ASOS shares slumped 29% by 1049 GMT after it warned it would miss profit forecasts due to a spike in returns in the UK and Europe over the latter part of its quarter to May 31, with inflationary pressures exacting a toll on its 20- something customers.

Boohoo shares were down 14% after it reported an 8% dip in first - quarter sales that partly reflected higher returns.

Both stocks are down 83% over the last year.

Returns are a big problem for an online retail model already battered by supply bottlenecks, slower product deliveries and higher freight and labour costs.

Higher returns add to warehousing and delivery costs and mean increased markdowns and labour inefficiency to clear the returned stock.

'We know that the sharp increase in return rates during the period happened at the same time that consumers started to feel the pinch', Jose Antonio Ramos Calamonte, newly promoted from chief commercial officer to ASOS CEO, told analysts.

He noted that in Britain, ASOS saw a sharp increase in return rates coinciding with increases in national insurance contributions and increased energy, food and fuel prices.

'Guess this is what they mean when they call it a baptism of fire', he said.

ASOS said the higher returns in the UK had offset a strong performance in occasion wear amidst an uplift in demand driven by holidays, weddings and events.