RE: Another sad day for ASOS3 Aug 2024 19:29
Link won't work so here is the rest of the article:-
Please be aware the eternal bulls/fools will probably try to put a positive stance on this.
A 1990s ruling had obliged states to add sales tax only if e-tailers had a physical presence within their borders, but with the ruling overturned, it means sales tax will be added to all transactions. The aim is to level the playing field between physical store retailers and the pureplay online rivals that have been grabbing market share in recent years.
The two UK companies see the US as a major growth market. They will see their prices rising in America at a time when the looming threat of trade wars is also adding extra price burdens onto fashion items.
Asos had previously applied sales tax in states where it has physical operations (which doesn’t have to mean stores but also ops such as distribution hubs). That affected New York, Atlanta and South Dakota. But it hadn't been applying sales tax in California, for instance, a state which not only has one of the highest tax rates at more than 8%, but which is also a huge market for Asos.
Last year, the company sourced around 13% of its total revenue in the USA, which added up to over £260 million coming from America.
And the stakes are even higher for Boohoo, with 16% of its revenue (or around £93 million) coming from that country.
Of course, it wasn't only international names that saw their share prices falling after the ruling. Domestic giants such as Amazon and eBay were also affected.
Analysts have put a very wide range on the figure that the ruling will now see states collecting, with sums between $8 billion and $23 billion being suggested.
Sales tax varies widely across the US with some states not applying it state-wide at all and others ranging from 1% up to around 10%.
As well as making goods sold to American customers more expensive, the system also adds an extra level of complexity to e-tailers’ operations.
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