Online retailer ASOS hit by teething problems at US warehouse

British online retailer ASOS said its brand-new warehouse in Atlanta, United States, struggled to cope with demand in its second quarter, resulting in a dip in U.S. sales along with adding to challenges inside the French along with German markets.

Chief Executive Nick Beighton said the company’s U.S performance was behind plan because higher-than-expected demand at its brand-new facility caused a significant short-term despatch backlog, which had today been cleared.

“These delayed shipments will be recognised in (quarter three) along with U.S. trading is usually today regaining momentum,” he said on Tuesday.

Beighton said ASOS, which targets style-conscious twenty-somethings, continued to outperform in Britain, with sales growth of 14 percent inside the quarter, although its two biggest markets in continental Europe – France along with Germany – continued to be challenging.

“We will be increasing investment in cost along with marketing inside the second half, particularly in France along with Germany,” he said. “Given the actions we are taking together with an improving U.S. performance, we believe the group will deliver stronger growth inside the second half.”

He said he was confident the group would certainly meet the full-year targets that will lowered in December, when that will cut its sales growth forecast to 15 percent along with its earnings before interest along with tax (EBIT) margin target for the year to around 2 percent, blaming a poorly executed Black Friday promotional campaign.

ASOS reported total retail sales up 11 percent in constant currency to 641.3 million pounds ($850.4 million) inside the quarter to February 28.

The retailer’s shares were trading 5.3 percent lower on Tuesday morning.