Online fashion retailer ASOS says warehouse woes are mostly over

LONDON: British online fashion retailer ASOS said problems with warehouses in the United States and Germany, which were behind a 68% slump in annual profit, were largely behind it, sending its shares sharply higher yesterday.

Shares in the firm, which sells fashion aimed at twentysomethings, were up 16% at 0744 GMT, paring year-on-year losses to 41%, after it reported “substantial progress” in resolving its operational problems.

ASOS is working through a major overhaul of its warehouse and technology capabilities, moving from a Uk-focused to a global model so it can better access growth opportunities.

It cut profit forecasts in July, saying problems ramping-up warehouses in Atlanta and Berlin had restricted product availability, hitting sales and raising costs.

“Back in July we said we’d be looking to resolve the (Berlin) euro hub by the end of September, we’ve done that,” chief executive Nick Beighton told reporters.

“We also said we’d be re-building our US stock product file, particularly with third party brands... We talked about having that in a much better position ahead of peak trading towards the end of October and we’re making good progress on that too,” he said.

ASOS made a pre-tax profit of £33.1mil (Us$42.2mil) in the year to Aug 31 – in line with July’s guidance of £30mil-£35mil but down sharply from £102mil in 2017-2018. Revenue rose 13% to £2.73bil.

“While there remains lots of work to be done to get the business back on track, we are now in a more positive position to start the new financial year,” said Beighton.

ASOS has made a “solid” start to the 201920 year, it said.

Prior to the update, analysts’ were on average forecasting a pre-tax profit of £63mil for 2019-20, according to Refinitiv data.