UK Fashion Retailer Asos Rallies after Warehouse Arson Attack
UK online fashion retailer Asos has resumed taking orders, despite a suspected arson attack at its main northern England warehouse at Barnsley on 20 June, which destroyed around 20% of its stock.
Customers took to social networking sites over the weekend to demand order updates from Asos, which earlier this month saw £1.2bn wiped off its shares after a surprise profits warning. The company took down its website following the fire.
There were fears in the aftermath of the blaze that the company’s market value might be further affected. Nick Bubb, a retail analyst at Arden Partners, said: “The worst case scenario is that customer confidence is affected for a longer period of time and that the suspicion of arson delays the insurance companies’ response.
“Although the City will be sympathetic about Asos’s misfortune, unless the company can issue a reassuring update, the short-sellers will target it.”
However, the company was quick to confirm that it was fully insured for loss of stock and business interruption. The swift resumption of its online service will also have reassured investors and the damage to its distribution facilities appears to have been minimal.
It is not the first time that Asos has suffered serious losses from fire. In December 2005, the company halted operations at its former southern England warehouse Hemel Hempstead after explosions at the nearby Buncefield oil depot.
In its recent profit warning, Asos cited the strength of sterling against other major currencies which had dented revenue and profit. The company sets prices in sterling and converts to local prices overseas, instead of initially pricing its products in the local currency. More than 60% of the retailer’s sales come from outside the UK.