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Asos warns of teething problems in US expansion push

Joanna Bourke

Asos on Tuesday admitted it had got off to a faltering start in its efforts to crack America, as it struggled to meet demand across the pond.

AIM-listed Asos, which sells its own clothing brand as well as labels such as Barbour and Fred Perry, opened its first US warehouse in Atlanta last month to give customers more choice.

Asos chief executive Nick Beighton said demand from shoppers after the opening was at levels he had not seen for nine years and far exceeded expectations.

But warehouse problems meant Asos had to freeze advertising and marketing campaigns in the US while it grappled with the orders influx.

The online fashion retailer’s US sales were hit following the delays, adding to other challenges it faced in the three months to February 28.

Beighton added: “Whilst very encouraging for the longer term, this caused a significant short-term despatch backlog which we have now cleared.” The delayed sales will be included in its third-quarter figures.

That contributed to group revenue coming in slightly below analyst forecasts. Shares plunged as much as 13% in early trading, before recovering slightly, down 67p, or 2%, to 3148p.

Sales rose 13% to £641.3 million in the second quarter.

The delays are the latest headache for the retailer, which also pointed to tougher trading in Germany and France where more investment in marketing will now take place.

In December the company issued a shock profit warning after suffering from more discounting by competitors and unseasonably warm weather in November.

Elsewhere today, womenswear retailer Bonmarché told the City full-year pre-tax losses will be between £5 million and £6 million. Bonmarché had previously guided a £4 million loss.

Trading since March has been weaker, reversing sales gains made in the previous months.

The shares plunged 9p, or 24%, to 28p.