Online Retailer Asos Foresee Profit Slide

Online fashion retailer Asos says discounts used to clear winter stock after warehousing problems will dilute full-year profits. Asos, which specialises in fashions based on celebrity styles, said pre-tax profits for the year to March 31 are estimated at between £1.05m to £1.2m, up on last year but described by chief executive Nick Robertson as "a disappointment" after strong sales across the year.

In January and February, Asos sales were up by 120 per cent and 140 per cent respectively. These stronger than forecast sales compounded problems caused by the business operating from four warehouses. Robertson said that "given the strength of our other business performance indicators, the profits shortfall can be directly attributed to our short term warehousing problems."

"Operating out of four warehouses has led to a delay in stock appearing on the website. As a result, we have had to heavily discount winter stock across January and February, which should have been selling at full price pre-Christmas."

The discounting has led to a significant increase in sales, and "as a consequence, we are bearing the costs associated with very high sales volumes but without the gross margin to support them." Asos has agreed terms on a new 70,000 sq ft warehouse, expected to be in place by mid-May. A general manager of distribution, previously head of supply chain at Hamleys, has been appointed to the logistics team.