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Asos’ US warehouse struggles to cope with demand

UK digital fashion store Asos said its new US warehouse struggled to cope with demand last quarter, hitting sales there and causing delayed shipments.

Asos CEO Nick Beighton said the unexpected high demand in the Atlanta warehouse caused a significant short-term despatch backlog, which has now been cleared.

“As our Atlanta warehouse went fully online, demand far exceeded our expectations,” Beighton said.

“While very encouraging for the longer term, this caused a significant short-term despatch backlog which we have now cleared. These delayed shipments will be recognised in P3 and US trading is now regaining momentum.”

The upsurge in US demand caused Asos to cancel marketing and promotions, Beighton said. These will now run in the second half of the financial year.

The online fashion retailer posted a 13 per cent increase in group sales for the latest quarter with retail gross margin improving by 40bps.

“We continued to outperform in the UK with sales growth of 14 per cent,” Beighton said.

Sales in Europe were up 12 per cent, although, according to Beighton, France and Germany, the two largest markets, continue to be challenging.

“Our ROW segment returned to good growth of 20 per cent after a disappointing Q1,” he said. “Our retail gross margin guidance for the year remains.”

Beighton said Asos will be increasing investment in price and marketing in the second half, particularly in France and Germany.

“Given the actions we are taking together with an improving US performance, we believe the group will deliver stronger growth in the second half,” he said.

“Consequently we remain confident that we will meet guidance for the full year.”

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