British online fashion retailer ASOS plans to overhaul its global distribution network as it aims to enhance its US operations.
The initiative underscores the retailer’s focus on delivering a more diverse product range with increased speed to market, while simultaneously achieving cost efficiencies.
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Starting from the second half (H2) of the fiscal year 2025 (FY25), the company will serve its US clientele from its automated fulfilment centre located in Barnsley, UK complemented by a smaller, agile local US site.
The retailer expects these changes to enrich the product selection available to US consumers, expedite product availability, maintain competitive delivery timelines and reduce overall fulfilment costs per order.
ASOS will therefore suspend operations at its Atlanta distribution centre in H2 FY25.
The facility will be put on the market following the culmination of a multi-year warehouse automation project.
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By GlobalDataThe company has given assurances that the seven directly impacted ASOS employees will be considered for alternate positions within the organisation where possible.
Third-party logistics partners are set to undertake efforts to reassign several hundred staff members to other nearby locations.
ASOS will also introduce Partner Fulfils in the US during FY25, expanding the range and availability of premium products from its partner brands.
ASOS anticipates these operational adjustments to yield an annualised earnings before interest, taxes, depreciation and amortisation (EBITDA) benefit between £10m and £20m starting from FY26, contingent upon a reduction in US de minimis [too small to be meaningful] thresholds and a similar positive effect on free cash flow from FY26 onward.
There is also the prospect of accruing additional working capital advantages.
For FY25, ASOS projects an approximately neutral influence on adjusted EBITDA. However, it expects £190m of adjusting items predominantly due to non-cash fixed asset impairments, which will negatively affect reported profit.
The company reaffirms its guidance for FY25 and beyond.
The company said in a statement: “ASOS remains excited about the opportunity in the US market and believes that its new operating model will better serve its US customer base while generating a better return on investment.
“The US remains a core market for ASOS, which it believes can return to sustainable revenue growth and generate 8% EBITDA margins in the medium term.”
