Online merchants lead Europe retailers back to Covid-19 lows

Bloomberg

Europe’s retail stocks are heading back towards pandemic lows. And after the profit warning from Asos Plc and the first UK sales decline in Boohoo Group Plc’s history, it’s online merchants that are leading them there.
Asos shares sunk as much as 28%, falling to the lowest since August 2010. The warning sent tremors through larger peer Zalando SE, which slid as much as 12% and pulled the Stoxx 600 Retail Index down to levels last seen in March 2020, when Covid-19 shock was sweeping through every business sector. Boohoo slumped as much as 19%, hitting its lowest since June 2016.
“The pace at which online retailers have gone from sitting on cloud nine to being stuck in the gutter is quite remarkable,” said AJ Bell investment director Russ Mould. Consumers are less likely to spend on clothing and footwear due to a surge in food and energy bills. And the pain is spreading beyond clothing
retail. Food delivery companies and athleisure stocks have also underperformed this year.
“The near-term remains pretty tough,” said Richard Saldanha, a global equity fund manager at Aviva Investors. “I think the consumer’s going to feel the pinch even more.”
The phenomena is global. The MSCI World Retailing Index, which includes the likes of
Target Corp, Zalando and Amazon.com Inc, is on track for its first negative year since 2008
as US behemoths such as Walmart Inc and Target have shaken investors.
What’s more, despite falling stock valuations, takeover bids are also faltering. A consortium backed by e-commerce investor Belerion Capital said it has decided to drop its pursuit of THG, sending shares of the embattled UK online shopping emporium down as much as 23%. Property entrepreneur Nick Candy was also said to have walked away from making an offer.