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StockBeat - Asos Sinks, Ocado Flies After Warehouse Troubles

By Geoffrey Smith

Investing.com -- Two companies, two warehouses, two very different reactions from investors.

ASOS (LON:ASOS) and Ocado (LON:OCDO), two U.K. names that are enjoying rather than suffering from the disruption of the retail sector, are heading sharply in opposite directions early Tuesday in Europe, as their struggles with warehousing problems puts their respective business models into sharp focus.

Online fashion shop Asos fell as much as 11% after the company said its new warehouse in the U.S. hadn’t been able to cope with higher-than-expected demand. It was the second U.S.-related disappointment from the company in a couple of months, after its Black Friday promotions went badly awry.

Nor has it had much better luck in France and Germany. CEO Nick Beighton told Reuters the company would have to invest more in promotions there in the second half of its fiscal year to get sales back on track.

The shares bounced to be down only 2.0% by 04:00 AM ET (08:00 GMT), reassured by Beighton’s comments that the U.S. business is now ‘gaining momentum’ and that the backlog will be cleared soon. But they’re still down by a quarter from before the Black Friday fiasco, and down by more than half from last year’s peak.

It’s a different story at Ocado, which hit new all-time highs after its latest quarterly update. The online grocer appears to have convinced investors that the disruption to its U.K. business after a fire at its biggest logistics center is no big deal – at least not compared to the money it stands to earn on selling its technology to the likes of Marks & Spencer and Kroger’s.The shares rose 3.4% and are now up nearly 50% this year.

Elsewhere in Europe, stocks are broadly higher after Wall Street hit a new four-month high on Monday. Germany's Dax and the U.K. FTSE 100 are both up 0.4%, as is the benchmark Euro Stoxx 600, at 383.64.

Deutsche Bank (DE:DBKGn) and Commerzbank (DE:CBKG) are both retreating, however, after Europe’s new head of banking supervision Andrea Enria poured cold water on the idea of creating national champions. Union pushback has also underlined the difficulty the banks would have in realizing the cost savings that would make the merger worthwhile.

Meanwhile in France, telecoms group Iliad (PA:ILD) is down 5.9% after cutting its cash flow targets this year and saying it may sell some of its mobile assets.

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