Asos share price steady despite warehouse fire
iNVEZZ.com, Monday, June 23: Asos (LON: ASC) was forced to suspend its website on Friday after a fire at its main warehouse in Barnsley, South Yorkshire. According to the South Yorkshire Fire & Rescue service the blaze covered four floors and it took 10 fire engines and more than 60 firefighters to bring it under control. About 500 workers were on site but everyone was successfully evacuated and none were injured, company officials said.
The Barnsley distribution center covers 650, 000 square feet and serves as the online fashion retailer’s primary warehouse. Every product Asos sells is checked there before being shipped for delivery.
On Saturday morning the South Yorkshire Fire and Rescue service reported that after initial investigations the police were treating the incident as deliberate.
The retailer’s website remained suspended throughout the weekend. Customers were notified that it might take up to two days to respond to their orders. “We expect to be back to normal for you in the next day or so,” a statement on the homepage said.
Asos began taking orders again early this morning. The company sent an email to its customers around 03:45 am BST saying that they could resume shopping.
Asos shares started trading nearly 2.5 percent down this morning, however by midmorning they had recovered and were trading in positive territory. According to The Times, there is unease among shareholders about short sellers trying to exploit the situation. The retailer is expected to reassure investors by saying that the loss is less than feared. A company spokesman said that Asos was “fully insured for both damaged stock and business disruption.”
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The fire was the latest setback for Asos. Earlier this month, the company announced its second profit warning this year. The statement resulted in a drop of nearly a third in the online fashion retailer’s market value. In addition, Asos said that a sharp fall in demand had left thousands of dresses, blouses and handbags unsold. The company has come under pressure as traditional retailers compete fiercely in online shopping in an attempt to profit from the increase in online sales.
The stock has plunged 55 percent since February when the company shares reached £70. Last week the shares closed at £27.52. Despite the decline, shares still trade at over 60 times earnings. The high share price has attracted traders who profit by selling stock they do not own in the hope of buying it back later at a lower price.
More than 60 percent of Asos’ sales are from overseas. In the quarter ended May 31, sales totaled £243 million. Last year the group had sales of £770 million.
The fire is not the first incident at an Asos warehouse. In 2005 the company’s only warehouse was seriously damaged by an explosion at the Buncefield oil depot. However, the retailer managed to quickly get back on its feet with profits doubling in the next financial year.
**As of 09:55 BST buy Asos shares at 2762.00p**
**As of 09:55 BST sell Asos shares at 2758.00p**