MissGuided might have found a rescuer in the shape of Mike Ashley’s Frasers Group, but few City analysts believe it will be the only casualty of the current swing away from fast fashion.
Share prices of the listed heavyweights reflect those concerns ASOS, for example, is down 70% from a year ago.
Boohoo has fared even worse and even FTSE 100 stalwarts such as Primark owner AB Foods and sector leader Next are under pressure.
Some might argue that makes the sector look cheap, but others point to a longer more structural shift at work.
Fast fashion at its height offered bang-on-trend clothes at affordable prices.
ASOS pioneered the movement with its focus on online shopping and young, super trendy employees.
Me-toos quickly sprouted led by boohoo, Quiz, Missguided and more recently the Chinese giant Shien.
To work, fast fashion requires a highly responsive supply chain to support a constant change in the clothes on offer.
Cue the first problem. To get that turnround speed requires ultra-smooth and low-cost supply chains and, increasingly, the scrutiny has turned on to just how the fashion retailers can sell so cheaply, so quickly.
Boohoo has borne the brunt of the criticism after the 2020 revelations over pay and conditions at some of its suppliers in Leicester, but it is far from alone.
Sweatshop factories in places such as Bangladesh supply many of the leading clothing brands and in an era where ESG is becoming more prominent by the day, companies are being forced to clean up their act.
On a global level too, the criticism is mounting. Clothing produces 92mln tonnes of waste a year and consumes around 1.5trn tonnes of water annually, the Mail recently reported.
Britain also buys more garments bought per person per year than anywhere else in Europe and only aviation is more polluting as an industry.
Dealing with these issues will be expensive and send prices higher, say experts.
Add in the disruption to those ultra-smooth supply lines caused by the recovery from Covid and it’s easy to see how the faults are emerging.
That was no problem while demand was still strong, but now the household squeeze is really starting to bite so the buy-side equation might be changing as well.
Jason Bason, Primark’s finance boss underlined the point earlier this week when he said the business might regret putting up prices for its autumn and winter ranges as people could spend less.
According to Liberum, too, the real crunch will be around that autumn and wintertime.
“Higher energy costs and the squeeze on living standards, with inflation at more than 8%, are seeing pressure on spending in the lower demographics.
“What we are not seeing, yet, is more affluent demographics trading down, but this could become prevalent post the Summer holidays and the next energy price cap review in October.”
So who is going to emerge from this in good shape?
Frasers buying Missguided suggests as ever it is prepared to play the long game, which should again prove its worth says Liberum.
AB Foods and Primark also remain a solid bet, says the broker.
“Primark has accelerated its store opening program, lowered operating costs, a more dynamic business with plans to enhance its online offering and potential for technology to take substantial cost out from the business.
“We think demand should recover as final COVID related restrictions in Europe are lifted.”
ASOS is facing stronger headwinds suggests the broker.
“While UK online clothing retail market has been more resilient than a number of other online categories as consumers continue to buy for return to work, events and travel, promotions/sales are being required to draw consumers in and we, therefore, think gross margins could contract further.”
“[In Europe] we would expect local players like Zalando to take share there given the much broader reach and assortment.”
Boohoo too is under the cosh, says Liberum. “The recent guidance cut reflects the weakness in current trading, where boohoo expects sales growth to turn negative, as well as heightened uncertainty.”
Website visits data suggests continued weakness in visits in April whereas the rest of the online competitors saw improvements.
Perhaps the wild card is away from the UK. Zalando is a higher growth but lower-risk way to play the European online fashion market.
It continues to grow quickly and has a target audience that is less fast-fashion sensitive than Asos and Boohoo, Liberum concludes.