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Online retailer ASOS hit by teething problems at US warehouse

Completed customer orders sit in a trolley at Asos Plc's distribution warehouse in Barnsley, U.K.
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British online retailer ASOS said its new warehouse in Atlanta, United States, struggled to cope with demand in its second quarter, resulting in a dip in U.S. sales and adding to challenges in the French and German markets.

Chief Executive Nick Beighton said the company's U.S performance was behind plan because higher-than-expected demand at its new facility caused a significant short-term despatch backlog, which had now been cleared.

"These delayed shipments will be recognised in (quarter three) and U.S. trading is now regaining momentum," he said on Tuesday.

Beighton said ASOS, which targets style-conscious twenty-somethings, continued to outperform in Britain, with sales growth of 14 percent in the quarter, but its two biggest markets in continental Europe - France and Germany - continued to be challenging.

"We will be increasing investment in price and marketing in the second half, particularly in France and Germany," he said. "Given the actions we are taking together with an improving U.S. performance, we believe the group will deliver stronger growth in the second half."

He said he was confident the group would meet the full-year targets it lowered in December, when it cut its sales growth forecast to 15 percent and its earnings before interest and tax (EBIT) margin target for the year to around 2 percent, blaming a poorly executed Black Friday promotional campaign.

ASOS reported total retail sales up 11 percent in constant currency to 641.3 million pounds ($850.4 million) in the quarter to February 28.

The retailer's shares were trading 5.3 percent lower on Tuesday morning.