Electricals retailer AO World has warned of shortages of products and delivery drivers before Christmas, as coronavirus disruption pushed one of the pandemic winners into a £10m loss between April and September.
Issuing its second profit warning in two months, the online retailer said shortages have been particularly acute in electronics such as Apple’s iPhone and games consoles including Sony’s PlayStation and Microsoft’s Xbox.
AO World, which started selling mainly white goods such as washing machines, said that it is experiencing “meaningful supply chain challenges with poor availability in certain categories, particularly in our newer products where we have less scale, experience and leverage”, before popular shopping periods including Black Friday discounting.
The company highlighted a shortage of components for manufacturers, which are in a global battle for supplies of semiconductor chips that are used in devices ranging from toothbrushes to electric cars.
Shares plunged 25% after the profit warning on Tuesday, to 94p, and are now 77% below their value at the beginning of the year.
AO, founded by its chief executive John Roberts in 2000, had soared in value during the pandemic, as store closures for large parts of 2020 and 2021 plus increased household savings adding to consumer spending power. That helped the company surge past its 2014 float price of 285p a share, and it broke above 400p for the first time in December as investors looked for companies which could continue selling through lockdowns.
However, AO said that it had remained “resilient”, with revenues up 6% year on year to £761m in the six months to 30 September. However, it lost £10m before tax during that period, compared with a profit before tax of £18m in 2020.
Adding to concerns about price increases that have prompted the Bank of England to prepare to raise interest rates, AO also warned that “shipping costs, material input prices and consumer price inflation remain challenging uncertainties”.
Roberts, who remains chief executive, said: “Our results over this period have inevitably been affected by the constraints and uncertainty seen across our industry. We’ve materially cemented the progress of last year, with a step-change in scale and consumer behaviour – and the fundamentals of the business are in place for sustained growth.”
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