Blog: Leonie BarrieTeenage spending continues to hold up

Leonie Barrie | 14 June 2010

The UK's largest independent online fashion and beauty seller Asos Plc continues to go from strength to strength, with a 44% jump in full-year profit and a 35% surge in revenues confirming that it really does sit in one of retailing's rare sweet-spots with its focus fixed on fashion-savvy 16-34 year-olds.

New initiatives aimed at moving Asos a step closer to its goal of reaching sales of GBP1bn (US$1.46bn) from its five main markets in the next five years include a possible tie-up with high street retailers for in-store collections and returns. The company has also invested GBP20m in a bigger warehouse to support its long-term sales growth and is set to launch dedicated websites for customers in the US, France and Germany this autumn.

Further proof that teenage spending continues to hold up comes from Spanish retailer Inditex, operator of the successful Zara fashion chain, which has booked a 63% hike in first quarter profit helped by strong sales of its spring and summer garments. The retailer, which has more than 4,700 stores in 76 countries, is also hoping for an internet boost when it begins selling its Zara range online in France, Germany, Italy, Portugal, Spain and the US later this year.

Meanwhile Wal-Mart Stores Inc has reiterated that its apparel business remains "a work in progress," downplaying its role in wider plans to create 500,000 jobs over the next five years as part of an international expansion strategy. The firm has also reshuffled executive responsibilities in the struggling apparel unit in an attempt to rejuvenate sales.

Challenges are also in the pipeline on the sourcing front as cotton prices in China are nearing their historical peak, squeezing garment manufacturers just as they head into the important summer buying season. Tight supply is also leading to problems in sourcing raw materials and may force makers to raise their prices, industry executives say.

Attempts to draw up a standard providing voluntary guidance on social responsibility for companies, governments and other organisations has also drawn a mixed review from experts and business leaders. The draft standard ISO 26000 is slated to be published as a fully fledged ISO international standard in November, and has been largely driven by consumer groups backed by major trade unions.

And changes are underway at UK retail giant Tesco after chief executive Sir Terry Leahy announced his retirement from the business next March. Leahy, who has spent 14 years at the top, will be replaced by Phil Clarke, who has been in charge of Tesco's businesses in Asia and Europe.


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