Boohoo now has higher market value than Asos
It's finally happened. Boohoo has overtaken online fashion retail rival Asos in terms of overall stock market value. While both companies are highly valued, with their shares changing hands at earnings multiples that most of their retail peers can only dream of, the momentum really does seem to be with Boohoo.
Asos, which has been around for longer, has a market capitalisation of £2.16 billion. Its shares change hands for around 2,574p each. Boohoo shares are currently trading at a cheaper 212.4p each, but there are more of them and they all add up to a company valued at £2.47 billion.
Boohoo has come on in leaps and bounds in recent periods and its acquisition strategy has been a big help. The company bought PrettyLittleThing (which has been seeing a phenomenally fast growth rate), as well as Nasty Gal and MissPap.
While both e-tailers operate in the fast fashion sector, they're actually quite different businesses with Asos acting as a multibrand store, as well as offering its own ranges. It sells goods from those at value prices up to those costing hundreds of pounds.
Boohoo, by contrast, has prices that rarely go above £100 with most of them much lower.
And it’s this relentless focus on affordable pricing, along with a design profile that taps into the current ‘reality TV’ look popularised by the Kardashians, that has helped Boohoo to its current position.
Its links with reality show Love Island have also helped to drive sales ever upwards and have therefore had a booster effect on the company’s share price.
Analyst Clive Black of Shore Capital told The Times that its “proprietary” approach is key in the current environment. “Boohoo owns, manufactures and directly procures a lot of the materials it sells,” he said. "It has greater control over its operating costs and a more direct relationship with shoppers. Asos is, to a considerable degree, an online wholesaler of clothes for other people.”
He also said that the Boohoo target customer is younger than those of its rival and likely to be going out more often and spending more on affordable fast fashion in the process.
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