Asos to mothball Lichfield warehouse amid falling profits

Asos is planning to mothball its second UK fulfilment centre in Lichfield next year, as part of efforts to cut costs after the group revealed losses widened in its latest full-year results.

In its latest financial results, Asos said that mothballing the site will provide an annual cost saving of around £20m, as well as the flexibility to either sell the facility or re-open it, depending on its capacity needs.

The automated Lichfield warehouse first opened in 2019. According to the retailer, the mothball process would begin in late FY24 following the completion of automation work.

It comes as the group said it plans to operate with less stock going forward under its new commercial model, and has already reduced stock levels by around 30% over the last year. Lookin ahead, it plans to reduce stock by a further 16% in FY24. 

As well as reducing stock levels, as part of its Driving Change agenda the group has increased profit per order by over 30%, refinanced its balance sheet bringing stability with the removal of profit-based covenants, and refreshed the leadership team to “bring new energy and expertise”.

CEO José Antonio Ramos Calamonte said: “While we begin to look again towards growth, we will retain our focus on operational excellence, simplifying all our processes and removing wasted time and cost to reinvest into productive commercial activities. 

“One aspect of this is better prioritisation, ensuring we are allocating resources to projects that will generate a return. As such this FY24 priority is as much about saying ‘no’ as it is improving the way we operate.”

This week, Asos announced its pre-tax loss widened to £296.7m for the year ended 3 September 2023, down from a loss of £31.9m in 2022. The company also saw its revenues drop 11% to £3.5bn down from £3.9bn in the same period last year.

The performance comes as Asos revealed it anticipates a second year of falling sales, forecasting a decline of 5% to 15% in FY24.