AO World shares crash 23% on warnings around profit and the supply chain

- Advertisement -


nline electricals retailer AO World is facing a flurry of headwinds impacting the business, from shortage of items like some gaming consoles to pressure on household spending.

- Advertisement -

The firm, which sells products such as TVs, laptops and washing machines, said: “We continue to see meaningful supply chain challenges with poor availability in certain categories, particularly in our new products where we have less scale, experience and leverage.”

- Advertisement -

It added: “In addition, shipping costs, material input prices and consumer price inflation remain challenging uncertainties.”

Demand for space on ships has surged across much of the retail sector, as online orders soar, as well as delays due to the pandemic.

- Advertisement -

All of those factors have contributed to the peak season, which covers October to run until Christmas, which is “significantly softer” than the firm anticipated just eight weeks earlier.

AO World expects sales to drop to minus 5% by March 2022, down from previous guidance of 5% growth.

Adjusted implied profit has been set in the range of £10 million to £20 million. The company had previously directed the market to a range of £35 million to £50 million.

Shares of AO World fell 29.56p, or 23.84%, to 94.44p.

The firm was one of the ‘winners’ of the pandemic, seeing bumper demand as people invested in their homes and as high street rivals temporarily closed shops for the time being in lockdown.

AO World chief executive John Roberts said the online transition will be a long-term trend that many shoppers are adopting. The firm saw sales improve 6% to £760 million in the six months to September.

But this turned into a £10 million pre-tax loss compared to last year’s £18 million profit.

AO World has been impacted by higher costs associated with supply chain challenges with lower-than-expected revenues. Black Friday is “softer than last year,” Roberts said.

Roberts pointed out that evening standard availability of Christmas gifts such as PS5 and Xbox was difficult, while higher import costs for some items meant some price increases for customers.

He continued: “There are many pressures at home, whether it’s on fuel or food. [costs], This affects household disposable income. ,


- Advertisement -

Stay on top - Get the daily news in your inbox

DMCA / Correction Notice

Recent Articles

Related Stories

Stay on top - Get the daily news in your inbox