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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n Plenty of shoppers have ditched Asos. Now index compilers are set to do the same. On Monday, the \u00a3360mn online retailer was slated for removal from the UK\u2019s FTSE 250 mid-cap benchmark, which is tracked by $7.5bn of funds; the final decision will be made next Wednesday.<\/p>\n Asos has had a chequered career. Its shares are worth one twentieth of what they were in 2021; performance metrics have wilted. Its gross profit margin last touched 50 per cent, a rough rule-of-thumb water line for the sector, in 2018, and fell to 40 per cent last fiscal year.\u00a0Free cash flow, negative in three of the past four years, is expected to come in at barely a dribble this year, based on consensus forecasts.<\/p>\n That\u2019s a comedown for a company that was \u2014 at least in the UK \u2014 early into the world of ecommerce. In the heady days of the 2010s, such an achievement was enough to earn it tech-stock treatment; investors duly valued Asos, at one point, at more than 100 times forward earnings.<\/p>\n But its roots are firmly tethered in the fickle world of fast fashion, where trends change on a dime. Asos had a fifth fewer customers last year than in 2021 and orders are running at roughly two-thirds levels that year, when shoppers grounded by the pandemic moved online.<\/p>\n It is a tale repeated across the landscape, both online \u2014 such as Boohoo, now Debenhams Group \u2014 and on the high street. This month River Island, with roots dating back to 1948, was forced into a restructuring after running low on cash. <\/p>\n In part, that\u2019s due to the fact that competition has surged since Asos burst on to the scene. Just think of Germany\u2019s Zalando, Chinese-founded Shein and Vinted, a platform for buying and selling used clothing and other goods.<\/p>\n On top of that, consumers, including in the UK, are cowed by slowing real wage growth and rising unemployment. Gen Z, at least on social media, is pledging frugality under the anti-consumerist \u201cNo-buy 25\u201d campaign and China\u2019s more restrained \u201crational consumption\u201d trend.<\/p>\n That\u2019s not helpful for a model predicated on volume growth. Asos, like its peers, has been changing things up and cutting costs. Inventory control, mismanagement of which left it with piles of dated clothes it had to write down, is improving.\u00a0In the first half, just 20 per cent of Asos\u2019 fast fashion had been hanging around for more than six months; the previous year the proportion was half.<\/p>\n The clearout is welcome but too tardy to prevent ejection from the index. That is the pity for Asos: investors, like fashionistas, tend to move in herds.\u00a0<\/p>\n louise.lucas@ft.com<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. Plenty of shoppers have ditched Asos. Now index compilers are set to do the same. On Monday, the \u00a3360mn online retailer was slated for removal from the UK\u2019s FTSE 250 mid-cap benchmark, which is tracked<\/p>\n","protected":false},"author":1,"featured_media":18062,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[10983,2772,4510,4101,10982,4005],"class_list":{"0":"post-18061","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-asos","9":"tag-falls","10":"tag-fashion","11":"tag-ftse","12":"tag-outcast","13":"tag-ways"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/18061","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=18061"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/18061\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/18062"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=18061"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=18061"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=18061"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}