ASOS is making changes to its global distribution network, with US customers set to be served from the online clothing retailer’s Barnsley fulfilment centre. As a result the business will mothball its Atlanta distribution centre.
Due to these operating changes, ASOS expects a £10-20m annualised EBITDA benefit from FY26 onwards.
In a statement to the London Stock Exchange, ASOS said: “With success over FY23 and FY24 in reducing stock levels by c.50% and launching its new commercial model which requires lower stock holding, ASOS can offer better access to product for its global customer base while further reducing its distribution capacity and increasing the efficiency of its operations.
“Having successfully transformed the US into a profitable market over FY24, ASOS sees further opportunity to re-invest in the areas that matter most to its customers by optimising its global distribution model. From H2 FY25, US customers will be served from ASOS’ automated UK fulfilment centre in Barnsley, and through a smaller, more flexible local US site.
“This will offer ASOS’ US customers an enhanced product offering, including a broader assortment and faster speed to market of the best and most exciting product, while offering competitive delivery speeds and lowering the total fulfilment cost per order. ASOS will also roll-out Partner Fulfils in the US in FY25, further broadening the breadth and depth of the best product from our partner brands.
“As such, ASOS will mothball its Atlanta distribution centre in H2 FY25 and will formally market the site following the completion of the multi-year warehouse automation project.”
Seven employees will be directly affected by the change in operations and will be offered alternative roles where feasible, and third-party logistics partners will make efforts to redeploy several hundred staff to nearby sites, according to ASOS.
The company added: “As a result of these operating changes, ASOS expects a £10-20m annualised EBITDA benefit from FY26 onwards, assuming a reduction in US de minimis thresholds, and a similar benefit to free cash flow from FY26 onwards, with potential for additional working capital benefits.
“In FY25, it expects the impact on adjusted EBITDA to be broadly neutral. ASOS expects c.£190m of adjusting items predominantly relating to non-cash fixed asset impairments, resulting in a corresponding negative impact on reported profit. The impact on FY25 free cash flow is expected to be broadly neutral. ASOS re-iterates all other FY25 and medium-term guidance.
“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.”
