Asos the fashion giant has said the problems at two of their warehouses is to hit profits harder than first thought, as their Berlin and Atlanta factories are proving difficult to get up to full speed.
The Berlin automation software had bee problematic, especially in ramping up production, and the Atlanta factory blamed supply companies for not getting stock quick enough to the warehouse.
Atlanta said, “Third-party brands providing product to the US for the first time proved slower to resolve US-specific compliance issues than we had anticipated, and we have not yet received the width of range from some of our more established brand partners.”
Pre-tax profits are expected to be between £30m and £35m, shares in the company were down after the news by 12% to 2,429p in early morning trading.
£3bn has been wiped off Asos value this year as a year ago shares were trading at 6,170p.
Chief executive Nick Beighton said, “Embedding the changes from the major overhaul of infrastructures 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.”
In the four months to 30 June sales grew by 12% however, this was held back as EU sales were up 5%, US sales were up by 12% and UK sales grew by 16%.
Russ Mould, investment director at AJ Bell said, “Fashion fans have plenty of places from which to buy clothes and so Asos is at risk of losing out to the competition if it cannot fix its problems fast.
“We live in an impatient world where so many people want something in an instant. If Asos doesn’t have the stock ready to ship, then consumers will simply go elsewhere.
“Operational issues are also bad for its reputation as consumers lose trust in a brand if they cannot get what they want, when they want.”
Retail analysts at Liberum said, “The operational issues in Europe and the US signal to us a lack of enough senior leaders in the business with the adequate skill-set in the business to undertake the complex capital projects ongoing.”