ASOS mothballs Lichfield warehouse

By Liza Helps, Property Editor Logistics Matters

THE CLOSURE of the 437,000 ft2 warehouse, which was only opened in 2021, comes as revenue fell 10% in the year to September and ASOS announced that it expected sales to fall a further 15% in the year ahead. It said it did not anticipate a return to profit until 2025.

The company announced in January this year that it was looking for reduce costs by £300 million by closing three warehouses worldwide, one in the USA, one in Europe and one in the UK. The company said it would also rationalise its office space removing 35 unprofitable brands from its online platform and reduce staff costs by 10%. In addition, the company focussed on reducing stock levels. This was in the light of a revenue fall of 3% and UK sales down 8% during the last few months of 2022. Revenue and falls in sales exacerbated through the first nine months of 2023 with no modest improvements in profitability as was hoped back in January.

At the time the UK warehouse set for closure was not identified. It is thought that the Lichfield facility was the prime candidate, but it was hoped that it could be saved if sales ticked up.

In the last year ASOS has reduced stock levels by around 30% and plans a further 16% cut in stocks over the next financial year. ASOS said clearing old stock and an "obsession with speed" would develop its competitive advantage going forward. In that context it said that having less stock meant that large parts of its Lichfield warehouse sat empty, which led the business to announce it would mothball the site meaning it won't immediately be sold, but will not be used. It said the closure would save it some £20 million a year.

The £90 million facility was let on a 15-year lease in 2021. It is thought it will now be available via a sub-lease. It features a 15m clear internal height, 50 Kn/m2 floor loading, 36 dock and six level access doors, as well as 33,000 ft2 of high quality offices. Along with a large secure yard, the site includes 540 car spaces. Rents in the region are around £7.75 – 8.75 per ft2 depending on quality currently, rising from £7.25 per ft2 at the beginning of 2021.

At the time of the facility’s opening ASOS said it expected to ship over 30 million units in the site’s first year, and up to 4.5 million per week once the facility was fully operational and automation is complete. It initially employed 700 people at the site.

Property consultant Knight Frank advises ASOS. ASOS has a 1.1 million ft2 distribution facility in Barnsley and returns facility in Doncaster in the UK. All threes sites in the UK managed via contract by GXO Logistics.