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


nline electricals retailer AO World is experiencing a flurry of headwinds hitting trade, from shortages of goods such as certain gaming consoles, to pressures on household spending.

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 newer products where we have less scale, experience and leverage.”

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

Across much of the retail sector there has been heightened demand for space on ships, as online orders soared, coupled with delays due to the pandemic.

Those factors have all contributed to the peak season, which covers October to the run up to Christmas, being “significantly softer” than the firm anticipated just eight weeks ago.

AO World expects sales for the year to March 2022 to be flat to minus 5%, downgraded from previous guidance of 5% growth.

Adjusted underlying profits are set to be in the range of £10 million to £20 million. The company had previously guided the market to a range of £35 million to £50 million.

Shares in AO World dropped 29.56p, or 23.84%, to 94.44p.

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

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

But it swung to a £10 million pre-tax loss compared with a £18 million profit last year.

AO World has been hit by higher costs linked with supply chain challenges, coupled with less revenues than expected. Black Friday “is softer than it was last year”, said Roberts.

Roberts told the Evening Standard availability of Christmas presents such as PS5 and Xbox was difficult, while higher import costs for certain goods meant some price rises for customers.

He added: “There are a multitude of household pressures, whether that is on fuel or food [costs]. It affects household disposable income.”

Most Related Links :
Business News Governmental News Finance News

Need Your Help Today. Your $1 can change life.

[charitable_donation_form campaign_id=57167]

Source link

Back to top button