Fashion retailer ASOS will close its £90m fulfilment centre in Staffordshire after only two years following a £300m loss before tax.
It said revenues could fall by 15% next year and so it intended to operate with less stock going forward.
ASOS said it had already reduced stock levels by around 30% and it intended a further 16% reduction in 2024.
It said: “In this context, post the year-end, we have reviewed our capacity requirements and started a process to mothball our second UK fulfilment centre in Lichfield in late FY24 following the completion of our automation work.”
Chief executive José Antonio Ramos Calamonte added: “We are taking decisive action in FY24 to clear stock brought in under our old model while substantially improving our speed to market and investing in our brand, reminding our customers what we’re really about: fashion.”
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ParcelHero said there was a risk ASOS could become the next fashion victim, but added that its “radical behind-the-scenes supply chain changes” could turn the retailer’s fortunes around: “It’s hard not to think that the online fashion giant expanded too rapidly during the pandemic-era online boom, opening a brand new, state-of-the-art £90m fulfilment centre in Litchfield in 2021 at the height of the e-commerce sales surge,” said David Jinks, ParcelHero head of consume research.
“Post-lockdowns, ASOS had to face up to a rapidly changing market. It now has agile and fast-growing online competitors such as Shein and must deal with the resurgence of high street fashion stores.
“However, longer term, ASOS’ new ‘Back to Fashion’ focus can restore its fortunes, although it’s not going to be a pleasant transition.
“As retail settles to a new equilibrium, it will be those retailers with strong in-store and online sales that will ultimately triumph in a post-Covid world,” Jinks said.
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