Financial News

  • 24 June 2014, 13:50

Asos 'Loses 20% Of Stock' In Warehouse Fire

Asos has confirmed that a fifth of its stock was "compromised" after a fire broke out at its main distribution warehouse.

The online fashion retailer said that at the end of May the company held 159m worth of stock at cost price, with 70% of it held at the warehouse in Barnsley.

Although the stock damage at cost price is estimated at around 20m, the value may exceed 30mat retail prices.

The company said in a statement: "None of the technology, automation or structure of the building has been affected by the fire.

"Our initial estimate is that approximately 20% of the total stock at the site has been compromised by fire damage and the sprinkler systems."

"The clean-up process commenced on Saturday morning and progressed quickly.

"Consequently, at 2am this morning we recommenced taking orders. We are fully insured for loss of stock and business interruption."

In early stock market trades, shares were down more than 2% before bouncing back to above the session's starting price.

Customer Hannah Williams, from Birmingham, had ordered a top on Friday for next-day delivery.

"Obviously it didn't arrive on Saturday and I've since received a generic letter saying it's on its way," she told Sky News.

"I'm hoping it arrives today. It's pretty inconvenient, but I suppose worse things happen in life."

The fire affected four floors of its warehouse in Park Spring Road, Grimethorpe, and led to 500 workers being evacuated after the alarm was raised at 9.50pm on Friday.

After initial investigations, South Yorkshire Police determined the fire was deliberately lit and have launched a criminal inquiry. The force appealed for anyone with information to get in touch.

Asos said it was "co-operating fully" with the investigation.

The warehouse is thought to handle over 10 million packages at any one time.

It is more than 60,000 square metres in size - bigger than seven football pitches.

In early June, the fashion giant's share price dropped 40% after the retailer issued an unexpected profit warning, wiping 1.2bn from its value.

At the time Asos said it would be less profitable this year due to higher promotional activity, the strong rate of growth in low-margin products, and foreign currency weakness because of the strong pound.

Previously, ever since it floated on the stock exchange in 2001, it had been a darling for investors who saw its value rise sharply.

Asos - which was originally called As Seen On Screen - has worldwide sales of 750m.

It has been one of the most successful businesses at capitalising on the large number of British consumers who have switched from high street shopping to buying clothes online.

Advertisement