Asos, the UK’s largest online-only fashion retailer, fell in London trading after a fire at its main warehouse in northern England caused the company to stop taking orders on its website.
The shares declined 3 per cent to 2,669 pence this morning, extending their drop this year to 56 per cent. The website was suspended on June 21st and remained out of action yesterday.
Asos started taking orders again in the early hours of this morning after completing a clean-up process at the Barnsley warehouse, the company said today in a statement. The fire, which broke out on Friday evening, is another setback in a troubled year for London-based Asos, which has cut its profit outlook twice amid weakening sales growth.
About $2 billion was wiped from the company’s market value on June 5th after the second reduction to forecasts in three months.
The blaze “will probably be greeted with a degree of disbelief by shareholders,” Clive Black, an analyst at Shore Capital in Liverpool, England, said by e-mail. “Investors will naturally be hoping that this is a short-term disruption.” Ten fire trucks were needed to battle the blaze, which affected several floors of the 60,000-square metre depot, the South Yorkshire Fire and Rescue service said in a statement. No-one was hurt, Asos said.
About 20 per cent of inventory held at the Barnsley site was compromised by the fire, the company said today. The warehouse accounts for about 70 per cent of Asos’s total inventory, which amounted to £159 million as of May 31st.
Police consider the blaze to be arson and have started a criminal investigation, Asos said, adding that it is fully insured for loss of inventory and business interruption.
It’s the second time in less than a decade that Asos has had to suspend operations due to fire damage. In December 2005, the company halted orders after explosions at the Buncefield oil terminal in southeast England damaged its warehouse. Asos moved distribution to the Barnsley site in 2011.
“Asos bounced back pretty quickly from the fire in 2005 in terms of sales growth, and I expect they will again, though clearly this is not a good thing,” Jamie Merriman, an analyst at Sanford C. Bernstein in London, said.
Bloomberg
