A comparison of the financial performance between two onlinefashion retailers during and after the 2008/2009 recession.

ASOS.com, a global online fashion and beauty retailer, was widening their product ranges in 2009 and was doing extremely well during the recession. one of the reason for ASOS's success was partly down to its constantly updated stock (Computerweekly, 2009). Secondly ASOS.com was so popular during the recession is that this online fashion retailer has made its name by selling cheaper versions of celebrities' outfits.

Net-a-Porter is a portal for the hottest designer labels and couture catwalk looks, which could be one of the reasons why it has been continues doing well during the recession. Many might say that those who have money are still prepared to spend it and that is why online fashion retailers like Net-a-Porter which are not seeing the effects of the recession. Net-a-Porter also launched a new website in 2009, TheOutnet.com, which is a high fashion outlet and was very popular under the consumers, because the products on this website were seen as stylish and affordable.

Financial ratio’s
Financial analysis are been made to know how a company is performing in the market. There are three important analysis that can be made. These are an Actual vs. Planned Performance which shows the progress which a company has made during a period, a Trend Analysis and an Industry Comparisons to detect strengths or weaknesses. In order to evaluate the performance and financial condition of a company financial ratios are used which always have played an important part (Kung, 1981). A financial ratio is simply a comparison of two measurements of a business to each other. 

There are several different ratios that can measure your company financial statement. The performance ratios measure how successful/failure a business is performing. Liquidity ratios measures a firm’s ability to satisfy its short-term obligations as they come due (Megginson and Smart, 2010).
Efficiency ratios are used to assess the extent to which asset an liability items are well managed and well utilised. And investment and lending ratios tells how a company is financed. This can be down by loans or/and investors (Gowthorpe, 2005).

To evaluate how Asos.com and Net-a-porter have been performing during and after the recession, performance, liquidity, efficiency and lending ratios are been used.

Analysis of financial data using ratio’s

Growth

Performance

Liquidity and efficiency

Lending and performance

Conclusion

Examination of the turnover and profitability of ASOS Porter and Net-a-suggests that the recession had a minimal effect. ASOS continued to grow aggressively during this period, with significant increases in turnover. ASOS had also an impressive return on capital employment, averaging around 60% over the four years, which would measure shareholders that their capital was being productive.

Longer stock turnover implying greater number of sales lines and lower cost of sales. The low debtor turnover ratio illustrates that customers online directly have to pay for the products. ASOS profit per employee was generally over .. that of Net-a-Porter. Illustrating

The gearing ratio of ASOS is low which should provide stability for the enterprise and an ability to plan growth for the future.

Overall ASOS managed to sustain significant growth through the recession, although it was starting from a lower turnover and a smaller business overall.

Reference list

Gowthorpe, C, (2005) Business Accounting and Finance for Non-specialists 2nd ed. Thompson.

Kung, h (1981) An Empirical Analysis of Useful Financial Ratios. Financial Management. 10 (1)

pp. 51-

Appendices