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18 Jul 2019 | 07:54

Asos warns on profits as difficulties with new warehouse facilities to continue

Online fashion retailer Asos warned on profits as difficulties with new warehouse facilities in the US and Europe were expected to continue for the remainder of the year.

The company cut its pre-tax profit guidance to a range of £30m to £35m, down from £35m previously, with restructuring costs expected in the region of £3.5m.

The company said it expected retail gross margin to fall by 250 basis points. 'Embedding the change from the major overhaul of infrastructure 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,' Nick Beighton, CEO. The company said it expected to resolve the issues by the end of September. The dour outlook comes as sales in Europe and US during were sales were held back by operational issues with its 'transformational warehouse programmes' in in Berlin and Atlanta.

For four months through June, reported sales increased 12%, with UK retail, and the Rest of World sales up 16%, but EU and US retail sales were up 3% and 6%, respectively.

Total orders placed increased 14% to 24.8m year-on-year. 'Our expectations for capital expenditure remain unchanged at c.£200m for this financial year, but as a result of the reduction in earnings, capital creditor expectations and working capital profile we now expect net debt at the year end to be c.£100m,' Beighton added.

Story provided by StockMarketWire.com
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