ASOS shares soar as it offloads Lichfield warehouse to M&S in £66m deal
Retail giant ASOS agreed to sell one of its stock warehouses to Marks and Spencer for £66m in the latest sign of its efforts to save money on rent and improve its financial position.
The fashion retailer said the sale of the Lichfield fulfilment centre, which is expected to close by the second half of this year, will result in at least £6m in annual savings on rent and occupancy costs and will generate a one-off pre-tax profit of roughly £85m.
The transaction is part of the company’s ‘Efficient Operating Model’, which sees it moving away from having surplus capacity to improve stock turn and simplify operations, following an earlier decision to mothball the Lichfield site.
ASOS said its sites in Barnsley and Berlin both provide “sufficient capacity to support future growth”, and the net proceeds from the sale will be used to “maintain financial flexibility” for the retailer and reduce debt.
Jose Ramos, ASOS chief executive said the sale “represents a further step in strengthening ASOS’s balance sheet and improving our capital efficiency.”
“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,” Ramos said.
Asos shares jumped as much as 12.5 per cent to 245p on Monday morning. M&S shares were down 9.8 per cent to 329p.
M&S to lock in ‘double sales’
In 2023, the online fashion firm said it was closing the warehouse in Lichfield, Staffordshire, as it expected sales to fall by at least 15 per cent over the year, the BBC reported.
The warehouse was opened only two years before and the closure cost approximately 700 staff their jobs.
Marks and Spencer said the deal to acquire the 437,000 square foot warehouse will become an operational logistics hub in 2027 and will employ 600 people “as it accelerates transformation” of the Fashion, Home, and Beauty arm of its business.
John Lyttle, the company’s managing director for Fashion, Home and Beauty, said it plans to use the site “to double online sales”
“To achieve this and serve our customers faster, more efficiently, and with better availability, our distribution network needs more capacity,” Lyttle said.