ASOS to Change Distribution Network in U.S.

Dow Jones2025-01-15

By Andrea Figueras

ASOS said it will make changes to its global distribution network to better serve its U.S. customers while generating a better return on investment.

Starting in the second half of fiscal year 2025, U.S. customers will be served from the company's automated U.K. fulfillment center in Barnsley, and through a smaller, more flexible local U.S. site, the London-listed online fashion retailer said Wednesday.

This will offer customers an enhanced product offering while enabling the company to reach competitive delivery speeds and lower the total fulfillment cost per order.

ASOS will also roll out its Partner Fulfils program in the U.S. in the fiscal year 2025. This program will allow brands fulfill orders to be placed on the ASOS website and app directly, without products being stored in the company's fulfillment centers.

Accordingly, the group plans to mothball its Atlanta distribution center in the second half and will formally market the site following the completion of the multi-year warehouse automation project.

Seven ASOS employees will be directly affected by the change in operations. They will be offered alternative roles where feasible, and third-party logistics partners will make efforts to redeploy several hundred staff to nearby sites, ASOS said.

The impact of the changes on adjusted earnings before interest, taxes, depreciation and amortization, and free cash flow will be broadly neutral in the fiscal year 2025, it said. ASOS anticipates around 190 million pounds, equivalent to $232.1 million, of adjusting items predominantly relating to non-cash fixed asset impairments, resulting in a corresponding negative impact on reported profit.

The company confirmed all other targets for this year as well as its medium-term guidance.

However, from fiscal 2026 onwards, the optimization of the distribution networks is expected to bring a benefit from 10 million to 20 million pounds in annualized Ebitda. The group expects a similar benefit to free cash flow, with the potential for additional working capital benefits.

The company opened a local U.S. office in 2024 and intends to grow its presence there. "The U.S. remains a core market for ASOS," it said, adding that it expects to return to sustainable revenue growth and generate around 8% adjusted Ebitda margins in the medium term.

Write to Andrea Figueras at andrea.figueras@wsj.com

(END) Dow Jones Newswires

January 15, 2025 03:08 ET (08:08 GMT)

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ASOS to Change Distribution Network in U.S.

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