Warehouse problems resolved after profit slump: ASOS

London

BRITISH online fashion retailer ASOS said problems with warehouses in the United States and Germany, which were behind a 68 per cent slump in annual profit, were largely behind it, sending its shares sharply higher on Wednesday.

Shares in the firm, which sells fashion aimed at twentysomethings, were up 16 per cent at 0744 GMT, paring year-on-year losses to 41per cent, 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 pretax profit of £33.1 million (S$58 million) in the year to Aug 31 - in line with July's guidance of £30-35 million but down sharply from £102 million in 2017-2018. Revenue rose 13 per cent to £2.73 billion.

"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 Mr Beighton.

ASOS has made a "solid" start to the 2019-20 year, the company said.

"While mindful of consumer uncertainty and retail trends in a number of our markets, we are confident in the substantial global opportunity for ASOS and look forward to the future with confidence," it added.

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