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There’s nothing like a global pandemic to send profits through the roof. Not many companies can say that the crisis has been good for business, and the few for whom it has are desperate to avoid that impression anyway.
The big supermarkets have gone to great lengths to highlight that booming sales have not come without additional costs to make premises Covid-proof and in order to meet surging demand.
But there’s no getting away from it at Asos where sales are up by a fifth, annual profits have quadrupled and the chain added more than 3m customers in just 12 months. Even a supply chain scandal at its biggest rival hasn’t dampened appetite for cheap, fashionable togs.
As long as its young customer base can still buy the latest trendy gear at knock-down prices, who cares if there are widespread concerns about how the so-called fast fashion industry makes its margins and whether they’ve been built on the misfortune of others? And who knew “staying-in” fashion was even a thing?
To be fair to Asos, there’s no suggestion that the factories it uses are guilty of the same abuses that were uncovered at one of Boohoo’s Leicester suppliers, but the retailer hasn’t kept its nose entirely clean. Staff at its Barnsley warehouse complained that they were scared to come to work because social distancing guidelines weren’t being observed and there wasn’t enough protective equipment being provided.
The GMB union called the site “a cradle of disease” but boss Nick Beighton refuted the claims, saying they were “false” and did “nothing more than serve to create panic and hysteria”.
All Asos’s suppliers meet its own code of ethics, he says. Production is even being ramped up in Leicester as part of a new brand launch. It is also spending £5m “to ensure our warehouses go well beyond government guidelines with respect to Covid-19 secure sites”, which begs the question: if everything was hunky-dory, why the need to improve standards?
Still, perhaps none of it really matters anyway. If we’ve learnt one thing from the scandal that engulfed Boohoo, it’s that for all the talk of younger customers being more socially conscious, the truth is that they care more about dressing well, and dressing cheaply, so the fast-fashion juggernaut hurtles on.
We care about supply chains in food because any malpractices or mistreatment as the result of cost cutting can flow up the supply chain and result in an inferior product; with fashion, all the benefits flow to the consumer who gets cheaper clothes while the mistreatment flows back towards the workers, often making garments in an unsafe factory on the other side of the world.
In other words, we care about supply chains when its abuses could impact on us; we care less when we benefit and someone else gets hurt.
Perhaps, then, if the industry can so emphatically shrug off concerns about its business model, it will be left to the virus to put the brakes on growth after all.
With the 10pm curfew remaining in place, and party season cancelled, the spectre of Covid suddenly looms a little larger. A warning about “pressure” on the disposable incomes of its “20-something customers” was enough to wipe 10pc off Asos’s shares yesterday.
Still, when you can pick up a pair of tracksuit bottoms in the sale for less than £15, maybe life carries on as normal.
G4S must do better
As takeover defences go, the revelation that revenues at G4S have been “resilient” is hardly likely to boost its attempts to escape the clutches of Canada’s Gardaworld.
It’s probably meant to sound impressive against the backdrop of a pandemic but the security giant will have to do better than that, particularly when, as the Canadians were only too happy to point out, a more accurate description would probably be “sagging”. Admittedly a sales fall of 2pc is hardly crisis-territory but, as they also highlighted, there was “no mention of profit or cashflow” for the nine-month period.
It’s all very underwhelming and risks giving private equity-backed Gardaworld the upper hand despite doing nothing to deserve it really. Sure, G4S’s turnaround has been big on promises and short on delivery, but 190p-a-share is obviously too low and therefore should be easy to reject. Meanwhile, a supposed rival bid has yet to materialise into a concrete offer, and is unlikely to on this showing.
The G4S board needs to up its game.
In case there was any doubt about the extent to which government support is propping up struggling companies, the number going under was close to an all-time low in the last three months, according to KPMG.
The accountant says: “The question remains … whether the can is simply being kicked down the road.” Short answer: of course it is. Prepare for an avalanche of insolvencies in the new year.