UK companies have opened US distribution centres to grow their businesses but it hasn’t always worked out. Dr Martens has had well-publicised issues, while Boohoo last year stopped supplying US customers from its US hub. Now ASOS is partly doing the same, although it will retain a small US facility.
ASOS
On Wednesday it announced “further efficiencies to its global distribution network” and said that “as part of its commitment to bringing customers the most exciting and relevant product while providing competitive convenience and sustainable, profitable growth,” it will “mothball its Atlanta distribution centre”. It will serve the US market from its “automated UK fulfilment centre in Barnsley, and through a smaller, more flexible local US site”.
The company was at pains to stress that it doesn’t represent any kind of retreat from America. It “remains excited about the opportunity in the US market and believes that its new operating model will better serve its US customer base, while generating a better return on investment. ASOS opened a local US office in 2024 and will continue to grow and build its local presence which it sees as crucial in building great customer experiences. The US remains a core market for ASOS, which it believes can return to sustainable revenue growth and generate c.8% adjusted EBITDA margins in the medium term”.
ASOS justified the closure move saying: “With success over FY23 and FY24 in reducing stock levels by c.50% and launching its new commercial model, which requires lower stock-holding, ASOS can offer better access to product for its global customer base while further reducing its distribution capacity and increasing the efficiency of its operations.
“Having successfully transformed the US into a profitable market over FY24, ASOS sees further opportunity to reinvest in the areas that matter most to its customers by optimising its global distribution model.”
The changes will kick in from H2 FY25 with the combination of the UK automated site and the small US site giving US shoppers “an enhanced product offering, including a broader assortment and faster speed to market of the best and most exciting product, while offering competitive delivery speeds and lowering the total fulfilment cost per order”.
ASOS will also roll out Partner Fulfils in the US in FY25, whereby products are shipped directly by brands, “further broadening the breadth and depth of the best product from our partner brands”.
The Atlanta site’s mothballing will see the company formally marketing the facility following the completion of the multi-year warehouse automation project. Seven ASOS employees directly affected by the change in operations “will be offered alternative roles where feasible, and third-party logistics partners will make efforts to redeploy several hundred staff to nearby sites”.
And perhaps the biggest justification for the move is that the company expects a £10 million-£20 million annualised EBITDA benefit from FY26 onwards, “assuming a reduction in US de minimis thresholds, and a similar benefit to free cash flow from FY26 onwards, with potential for additional working capital benefits”.
In FY25, it expects the impact on adjusted EBITDA to be broadly neutral. It also expects around £190 million of adjusting items predominantly relating to non-cash fixed asset impairments, resulting in a corresponding dent to reported profit.
Burberry announced a key appointment on Friday with the luxury business saying it will soon have a new chief information officer.
Charlotte Baldwin
It has appointed Charlotte Baldwin to the role and she’ll join the business at the end of March. Baldwin will be responsible for leading Burberry’s global technology team and will join the executive committee. She’ll report directly to Burberry CEO Joshua Schulman.
He described her as “a highly experienced technology and digital leader with a track record of leading large-scale digital transformation”.
She hasn’t previously worked in the luxury fashion sector but has wide-ranging experience across some major-name businesses in Britain.
She’s currently the global chief digital and information officer at coffee chain Costa Coffee where she oversees the company’s technology, digital and data organisation.
Prior to joining that firm, she was the chief information, digital and transformation officer at private healthcare giant Bupa’s Bupa Insurance unit. She’s also held senior roles at Freshfields Bruckhaus Deringer, Pearson and Thomson Reuters.
Burberry has been navigating a tough period of late and Schulman joined in the top job last year, tweaking the firm’s strategy. His approach seems to be paying off with the company last week porting improved results, although the turnaround is still undeniable a work in progress.
Another day, another shopping centre delivering a “record-breaking” performance in 2024. This time it’s Gloucester Quays “capping off another year of considerable growth”, for the owner/operator Peel Retail & Leisure.
That included record Christmas trading at the key Gloucester mall, which helped overall sales for the year finish 6.7% ahead of the national average. Across November and December, retail sales grew 3.6% compared with 2023.
Looking at 2024 in total, an overall 7.4% year-on-year sales increase across its tenants was split between 6.1% for retail, and 8.5% for F&B.
But there was also double-digit growth from leading fashion, homewares, and outerwear brands including Next, Skechers, All Saints, Mountain Warehouse, Puma, Crew Clothing and Suit Direct.
It said sustained growth was seen across all categories “points to the increasing relevance of the Gloucester Quays experience”.
Paul Carter, asset director at Peel Retail & Leisure, added: “There have been various headlines this month about how challenged retail was around Christmas, so to have Gloucester Quays performing so well is a real credit to our team and our brands.
“These results also serve as a reminder of how relevant and in demand this outlet is. We have experienced consistent growth for several years, and that success can be put down to the quality of our offer and waterside environment. There is no doubt our catchment is responding to how we have evolved Gloucester Quays, as an urban outlet that combines a compelling shopping environment with dining and leisure to fit all tastes and needs, benefitting from a heritage waterside setting that few regionally can match.”
Italy’s Give Back Beauty, which makes perfumes for luxury brands such as Chopard and Zegna, on Friday said it had agreed to buy domestic rival AB Parfums to grow its distribution operations and add licensing deals.
Corrado Brondi, founder and president of Give Back Beauty
Fragrances have been outperforming the broader beauty sector and Give Back Beauty founder and Chairman Corrado Brondi told Reuters his company did not rule a possible bourse listing in the future, adding it had no financial need for it at present.
Brondi said AB Parfumes had sales of around €100 million, which would add to Give Back Beauty’s net revenues that totalled around €300 million in 2024.
Give Back Beauty, which was founded in 2019 and has a distribution deal with Dolce & Gabbana and a beauty license with Tommy Hilfiger, has a core profit margin currently a little over 15%, it said.
AB Parfums is being sold by Italy’s Angelini Industries, a family-owned group that is mostly active in the pharmaceutical sector.
Give Back Beauty’s business is currently focused on fragrances, which represent roughly 70% of its revenues, but it aims to grow its skincare, make-up and haircare product lines, Brondi said.
Entertainment8 years ago