Asos issues profit warning due to warehouse problems

Asos Plc, in its trading update for the four months to June 30, 2019 said that total sales growth in the period was 12 percent on reported basis and 11 percent on constant currency basis to 919.8 million pounds (1,144 million dollars). The company added that sales in the UK and ROW remained robust 16 percent and 14 percent respectively but in Europe and US sales were held back by operational issues associated with the transformational warehouse programmes by 5 percent and 12 percent respectively. So the company has revised its guidance for FY19 and said, retail gross margin is expected to be down 250bps and PBT of 30-35 million pounds after 47 million pounds transition costs compared to previous estimate of 35 million pounds and 3.5 million pounds restructuring costs.

Commenting on the trading update, Nick Beighton, Asos CEO, said in a statement: “Embedding the change from the major overhaul of infrastructure and technology in our US and European warehouses has taken longer than we had anticipated, impacting our stock availability, sales and cost base in these regions. We are clear on the root causes of the operational challenges we have had, are making progress on resolving them, and now expect to complete these projects by the end of September.”

The company said that total orders placed during the period under review were 24.8 million, up 14 percent year-on-year, while customer visits increased 16 percent.

Picture credit:Asos via Instinctif Partners