Marks & Spencer is poised to lose its crown in the British fashion industry to its younger online rival Asos, in what is being described as a seminal moment for UK retail.
In the latest sign of traditional corporate powerhouses being overtaken by newer technology-focused firms, the market value of 17-year-old Asos is just shy of £100m below that of the 113-year-old mainstay of the UK high street. M&S has a market value of £5.08bn, compared with Asos’s £4.98bn.
City analysts said it was only a matter of time before Asos leapfrogged M&S. Mark Photiades, a retail analyst at Cantor Fitzgerald, said: “The valuation gap between the two businesses is the smallest it has ever been and we believe that it will not be long before Asos has a greater market value than M&S. It will be a seminal moment.”
The shift in retail power was compared with the automotive industry, where the electric car maker Tesla sped ahead of the 114-year-old Ford Motor Company in April to become the US’s biggest car manufacturer.
Similarly, the online retailer Amazon is now worth twice as much as Walmart, after overtaking the American grocery chain in 2015.
Photiades said that 20 years ago, when online shopping was in its infancy and before Asos was established in 2000, M&S had a market value of £16.9bn. When Asos floated on the stock market in October 2001, it was valued at just £14m, compared with £7.8bn for M&S.
Asos still has a way to go to catch M&S in terms of total sales and profit, however. Asos sales were £1.4bn last year, compared with £10.6bn at M&S. Profits were £42.8m and £176m respectively.
Mike Lewis, the head of the property litigation team at SA Law, said the consumer shift towards online shopping was taking its toll on UK high streets. “The demise of BHS and the empty stores in places such as St Albans one year on, reflect that finding tenants for such sizeable units that the likes of M&S occupy is not an easy exercise,” he added.
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