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Business

Published on November 23rd, 2021 | by The GC Team

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AO posts half-year losses and warns of “significantly softer” peak trading

Online electricals retailer AO today warned that supply chain issues and product shortages may hit festive trading as it posted a pre-tax loss of £10 million for the six months ended 30th September, against an £18 million profit in the same period last year.

The retailer said it had planned for continued revenue growth at the start of its financial year in April and built up its cost base accordingly. However, since then, growth in the UK has been impacted by the nationwide shortage of delivery drivers and the ongoing disruption in the global supply chain. 

Group revenue for the six months rose 6% to £760 million, while operating profit fell from £16 million to a loss of £11 million.

Looking at the second half of the year, the business said it continues to see “meaningful supply chain challenges” with poor availability in certain categories. Shipping costs, material input prices and consumer price inflation remain challenging uncertainties, it said.

As a result of these factors, the retailer’s all-important peak trading period is significantly softer than anticipated only eight weeks ago and full-year Group revenue is now expected to be flat to -5% year on year, with Adjusted EBITDA in the range of £10m to £20m.

“While a substantial amount of short-term uncertainty remains, we are taking decisive action to address and mitigate the issues and are confident in our ability to trade our way resiliently through this period,” the company said.

AO Founder and Chief Executive John Roberts, said: “We’re working hard to solve some of the current challenges that our industry is facing. We’ve recruited c.500 new drivers and are working closely with our manufacturer partners so that customers can get what they need.

“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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