Struggling fashion site Boohoo has pulled the plug on its US warehouse less than a year after hailing the launch of the site as a “complete game-changer” in its attempts to crack the American market.

The embarrassing retreat, which is expected to result in a financial hit of more than ￡40m, is the latest in a string of setbacks which has prompted a sustained sell-off of its shares. Its share price fell more than 2pc to fresh lows of less than 28p at one stage following the announcement.

Boohoo said it would stop supplying US customers from a distribution centre in Pennsylvania and return to fulfilling orders from Sheffield, South Yorkshire. The about-turn threatens to deal a sizable blow to its international ambitions.

John Lyttle, Boohoo’s chief executive, had described the site as a “complete game-changer” because it would slash delivery times to shoppers in the US – Boohoo’s largest overseas market – as well as give them access to a wider range of products.

Previously, US customers could only access around 60pc of the styles available to UK consumers.

Analysts said disappointing sales had forced the company into a humiliating reversal.

The decision to switch to “a direct US distribution model” was made three years ago when turnover in America was ￡450m a year and “growing at double digits”, according to brokers Peel Hunt.

“Volumes are now nothing like what the company had planned for,” it said.

Katie Cousins, an analyst at Shore Capital, said Boohoo had been forced to back-pedal because it had “failed to gain traction in the US despite investing to grow market share and improve delivery times for consumers”.

The volte-face has highlighted “a naivety of the American market, along with a waste of time and resources”, she said.

“To us, the short life of the US warehouse – previously stated as a key pillar of growth – is concerning,” Ms Cousins added.

One retail consultant said he thought it could be “the beginning of the end” for Boohoo’s US ambitions. However, a source close to the company said: “This is absolutely not about it giving up on the US.”

It is estimated that the cost of pulling back from the Pennsylvania hub would probably be in excess of ￡40m.

Shore Capital said Boohoo would take an $8m (￡6m) write-down on the lease it had signed on the site, which runs until 2032, and a ￡34m hit on the capital that had been pumped into it.

There would also be a further one-off “exceptional cash cost”, which the broker assumed would be in the “mid-single digits”.