Online fashion retailer shares fall on delays in US
Online fashion retailer Asos said its new US warehouse struggled to cope with demand in its latest quarter, hitting sales there and adding to challenges in France and Germany. The news was the latest setback for the one-time market darling following a shock profit warning in December and sent its shares down as much as 13%.
Chief executive Nick Beighton said the company’s US performance was behind plan because higher-than-expected demand at its new facility in Atlanta caused a significant despatch backlog, which had now been cleared.
“These delayed shipments will be recognised in (the current quarter) and US trading is now regaining momentum,” he said.
As Asos struggled to cope with the upsurge in US demand it axed marketing and promotions, he said.
The setback came after a profit warning in December sent Asos shares tumbling to a four year low and raised concerns among analysts that online retailers might not be as sheltered from the headwinds facing the sector as assumed. Mr Beighton said there was a “slight improvement” in own-brand fashions, which account for about 35% of sales, in the firm’s fiscal second quarter after a weak first quarter. Asos shares fell almost 6% in the latest session.
Meanwhile, shares in UK online grocer rose after Ocado played down the impact of a fire which devastated its flagship distribution centre in southern England, saying the blaze didn’t affect its long-term plans.
Though the cause of the fire in Andover is still being investigated, Ocado said its initial assessment had given it confidence there are no significant implications for the risk profile of its assets.
Its shares also rose almost 6% to a new record.
