Closure is part of retailer’s strategy to scale back its clothes stock - Dado Ruvic/Reuters

Asos has said it will mothball a key UK warehouse only two years after it opened in a bid to cut costs in the face of falling sales.

In an announcement on Wednesday, Asos said it expects to save £20m a year by closing its site in Lichfield, Staffordshire, which comes less than a year after it shut three of its storage facilities.

Asos said the decision was taken as part of plans to significantly reduce how many products it stocks, as it scales back its “infinite aisle” of clothes. The Telegraph revealed at the weekend that it is in talks to sell Topshop, which it acquired in 2021 and values at £265m, to the US retailer Authentic Brands.

It has already reduced stock levels by around 30pc over the past year but it has now told investors it will cut stock numbers by a further 16pc over the next 12 months.

Asos said mothballing the £90m site, which opened in 2021, “provides the flexibility to either sell the facility or re-open it, depending on our capacity needs”.

The move comes as Asos pushes ahead with turnaround efforts spearheaded by chief executive José Antonio Ramos Calamonte, who is targeting a return to profits.

In the latest financial year, the company’s losses before tax ballooned to almost £300m, compared to £32m a year earlier.

It has recently been racing to make its orders more profitable by cracking down on frequent returners of clothes and cutting back on discounts.

Overall sales slipped 10pc in the latest financial year, as revenues hit £3.5bn, while the slump was more pronounced in the UK where they fell by 13pc. This is thought to be because younger shoppers are struggling with cost-of-living pressures and cutting back on how much they spend on clothes.

This had resulted in “aggressive discounting” in the market, Asos said.

Asos is expecting the challenging conditions to continue over the next 12 months, with sales likely to fall between 5pc and 15pc over the next year.

However, it has forecast a return to growth in 2025, when earnings will return to pre-Covid levels.

It said the next year would be “about taking the necessary action to get us to that path”, including discounting older stock to clear out inventories and spending heavily on marketing.

Mr Calamonte said: “We are taking decisive action in the coming year to clear stock brought in under our old model while substantially improving our speed to market and investing in our brand.”