17th June 2022
Bite-sized business news from the UK and beyond
Good morning If you own an older iPhone then you could be in line for compensation as part of a £768m lawsuit against Apple. It’s alleged that the tech giant deliberately slowed down the performance of its phones with a software update in 2017. Up to 25m Brits who owned an iPhone 6, 6 Plus, 6S, 6S Plus, SE, 7, 7 Plus, 8, 8 Plus and iPhone X model could be able to claim damages if the lawsuit is successful.
- Going up: Interest rates rise to 13 year high
- Going down: Rising customer returns sink Asos profits
Interest rates rise to 13 year high
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Rising customer returns sink Asos profits
Yesterday online retailer Asos warned that its profits for this year would be £20-60m lower than expected driven by a higher rate of customer returns.
Consumer behaviour has started to change as the cost of living crisis begins to bite. Asos has seen a steep jump in the number of items being returned as customers realise after purchasing that they might no be able to afford the goods.
Compared to physical stores, returning items to online retailers is much more expensive. That’s because the process is manual and costly with shipping, sorting and cleaning involved. Also returned stock often has to be discounted before they can be resold. Asos doesn’t charge customers for returns so bears all the costs itself.
Looking ahead, Asos is more exposed to a consumer downturn. The company's average 20something customer is particularly affected by the cost of living crisis as they have lower discretionary income with rent, petrol and food going up in price in many countries.
Fair to say investors were spooked by the news. Asos shares plunged 30% to £8, a 12 year low and a stark contrast from the £59 reached in March 2021 when the company benefited from a lockdown-related shopping boom.
Asos isn’t the only retailer that’s feeling the pain. Yesterday fast fashion giant Boohoo reported that sales in the UK had fallen for the first time in its history, blaming supply chain disruption and fierce competition from international rivals. Shares in bike retailer Halfords dropped 27% yesterday after it announced that inflation was hitting earnings and demand for its products.
Stat of the day
8 million Australians have been urged to turn off their lights in a bid to save energy
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