Online fashion retailer ASOS has recently posted favourable results and is now valued at more than the 133 year old high street stalwart Marks and Spencer’s.
Needless to say the market capitalisation, its value on the stock market, is a valuation of a company that reflects expected future earnings. As it stands, M&S remains bigger both in terms of sales and profit. Asos posted sales of £1.9bn last year, compared with £10.6bn at M&S. Profits were £80m and £176.4m, respectively.
Even internally M&S recognises that it has failed to develop and innovate in the ever challenging retail environment which has been touch for established high street retailers. The new chairman Archie Norman said recently: “This business has been drifting, underfulfilling its customer promise not for five years, not 10 years but 15 years and maybe beyond.”
The milestone has been hailed as a “Tesla moment” for British retailer. That refers to when elctric car company became more valuable than Ford. It’s also worth noting that Amazon is now worth more than twice as much as Wal-mart.
It scarecely needs reiterating that these newer companies have a huge future ahead of them and the old guard is struggling to keep up. It’s not just about technology. Maintaining a high street network of shops, with thousands of staff, is very much more expensive than maintaining an online operation.
