Investing.com -- ASOS (LON:ASOS) on Wednesday announced plans to mothball its Atlanta distribution center in the second half of 2025, marking a shift in the company’s logistics strategy in the U.S. market.
The Atlanta site, which opened in 2018, has been a key hub for the retailer's operations and has seen substantial investment over the years, including a large-scale warehouse automation project that is still ongoing.
In a statement, ASOS said that the closure will result in approximately £200 million of profit and loss adjusting items during FY25, primarily tied to fixed-asset impairments.
Despite the headline figure, the financial impact is expected to be broadly neutral for the fiscal year.
Analysts at Jefferies have flagged the anticipated long-term benefits of the move, with ASOS projecting annualized P&L and cash flow improvements of £10-20 million starting in FY26.
This follows the mothballing of the Lichfield distribution center in the UK in 2023, as well as the expansion of its "Partner Fulfils" program—a fulfillment model that leverages third-party sellers to ship directly to customers.
“From H2 FY25, US customers will be served from ASOS' automated UK fulfilment centre in Barnsley, and through a smaller, more flexible local US site,” the company said.
These changes are expected to enhance operational efficiency while reducing overhead costs.
While ASOS remains optimistic about the U.S. market, calling it an "opportunity," the decision to close the Atlanta DC highlights the challenges the company is facing in the region.
Analysts at Jefferies view this as a retreat, with ASOS writing off a portion of its invested capital in the process.
The decision aligns with the company's ongoing focus on optimizing its cost base and improving profitability, but it also raises questions about the scalability of its U.S. operations in the near term.
ASOS maintains that its commitment to the U.S. remains strong, pointing to the rollout of Partner Fulfils and the establishment of a smaller local site as key enablers of its growth ambitions in the region.
However, the closure of such a high-profile facility reflects a notable recalibration in the retailer's approach to navigating the complexities of international expansion.
For stakeholders, this development signals both caution and opportunity. While the immediate impact may be neutral, the long-term financial gains and operational efficiencies are expected to strengthen ASOS's overall position.
Yet, the closure also highlights the inherent challenges of maintaining costly infrastructure in a competitive and unpredictable retail environment.
“We believe this reflects a focus on protecting unit economics, which we expect to continue, in the light of a very competitive environment," said analysts at RBC Capital Markets in a note.
"As profitability remains a priority, growth investments may be curbed somewhat, at the potential detriment to growth beyond FY25,” RBC added.