Shares in ASOS (ASC) leapt after the online fashion retailer announced the sale of its Lichfield fulfilment centre to Marks & Spencer (MKS).
ASOS said the disposal marks another step in the ‘structural transformation’ of its financial position. The sale comes at a time when the company is focused on slashing costs and strengthening its balance sheet.
Bringing in net proceeds of ‘at least £66 million’, the sale is expected to yield annual cash cost savings of around £6 million relating to rent and other costs.
One-off windfall
ASOS’ Lichfield site had already been mothballed to address excess capacity under an overhaul to reduce stock and costs.
In today’s statement, ASOS assured investors that its Barnsley and Berlin fulfilment centres provide sufficient capacity to support future growth. The property transaction should result in a one-off profit before tax of about £85 million after adjustments linked to property liabilities.
Once the deal completes during H2 FY26, the net proceeds will add to ASOS’ £209.5 million cash position as at 1 March 2026, resulting in a pro forma net debt (excluding lease liabilities) position of roughly £228 million.
As for clothing rival Marks & Spencer, it said the 437,000 square foot Lichfield site will be one of its largest distribution centres when it opens in 2027.
Unlocking value
ASOS’ CEO Jose Antonio Ramos commented: ‘This transaction enables us to unlock value from one of our non-core assets while reducing our ongoing cost base, consistent with the actions we have taken over the past three years to simplify the business and enhance financial resilience.’
He added: ‘ASOS is a well-invested business and we have significant capacity to support future growth. We will continue to maintain a disciplined approach to capital allocation as we execute our strategy.’
ASOS shares have shed 95% of their value over the past five years following the fading of the Covid lockdown-induced sales boom.
The online fast-fashion purveyor has grappled with a litany of challenges. These range from fierce competition and weak consumer demand to supply chain issues and US tariffs.
Antonio Ramos has done a great job in repairing the balance sheet, cutting costs and improving stock turn. Nevertheless, we would avoid ASOS for now given the uncertain consumer backcloth.
Despite some positive underlying sales trends, H1 results (23 April) showed a double-digit revenue decline to £1.1 billion. And ASOS remains indebted and mired in the red.
Disclaimer: James Crux has a personal investment in Marks & Spencer.
Read the press release here: https://www.asosplc.com/investors/
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