After falling in early deals following news of a fire at its Barnsley warehouse, online 'fast fashion' seller ASOS (ASC:AIM) sparks up 3p to £27.55 as a short statement settles investors' nerves. However this latest incident is the last thing the erstwhile stockmarket darling needs, given its recent severe profits warning and concerns bricks and mortar rivals are stepping up their web-based capabilities.

ASOS says a criminal investigation is underway following Friday's night's fire, which thankfully resulted in no injuries. The bad news is fire damage and sprinkler systems are thought to have ruined up to 20% of the stock, valued at £110 million at the end of May, at the South Yorkshire site.

Web chart - Asos - 23 June 2014

Based at Grimethorpe, just outside Barnsley, the 560,000 square feet facility is the hub of ASOS' distribution capability, home to around 70% of its stock. Though the web-based fashion and beauty retailer operates smaller facilities in Germany, the US and China, Barnsley handles roughly 90% of all its orders globally.

The good news is ASOS insists none of the building's technology, automation or structure has been damaged by the fire. The £2.3 billion cap acted swiftly by suspending taking orders over the weekend and reopened for business in the small hours of Monday morning and assures it is fully insured for loss of stock and business interruption, the likely catalyst for today's share price rise.

Business continuity is a major consideration for any high growth online retailer with heavy reliance on one facility, though ASOS does have some experience in such incident management from 2005, when in the then Hemel Hempstead warehouse was damaged by nearby explosions at the Buncefield fuel depot.

Though ASOS acted quickly by suspending taking orders, so as not to dent consumer confidence, this is a headache CEO Nick Robertson could well do without. In a severe profits warning earlier this month, the Aim giant slashed its full-year operating margin target due to a perfect storm of a strong pound, heavy discounting and slowing overseas sales. This followed a disappointing March update, in which ASOS flagged slowing UK growth, lower than expected margins and increased losses from its drive into China.

Freddie George, retail scribe at Cantor Fitzgerald Europe, sticks with his 'hold' rating on ASOS, though pushes through a chunky target price downgrade from £35.00 to £25.00 on today's news, a target already slashed from £50.00 following this month's earnings alert.

George writes: 'For the time being we are provisionally retaining our full year 2014 pre-tax profit forecast of £46 million and earnings per share (EPS) of 42.1p as we assume that any stock loss will be covered by insurance. The police are treating the incident as being deliberate and have commenced a criminal enquiry.' The analyst continues, 'as we noted after the third quarter statement, bad news comes in threes and it will take time, we believe, to remedy the range issues and there is a strong likelihood of a third profit warning in the lead up to the autumn/winter 2014/15 season.'

Jefferies' analyst David Reynolds, however, adopts a more bullish stance and reiterates his £57.00 price target and 'buy' rating on the stock. 'We remain confident in the model, management team, margin expansion story and in this instance, the capability of the team to respond under pressure', he explains.

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Issue Date: 23 Jun 2014