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Published on October 1st, 2021 | by The GC Team

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Driver and supply disruption impacts AO half-year growth

Online electricals retailer AO posted continued growth in the first half of the year despite a “challenging” operating environment impacted by the nationwide shortage of delivery drivers and ongoing disruption in the global supply chain.

In a trading update for the six months ended 30 September 2021 the retailer said like-for-like Group revenues increased c.5% against strong comparatives during the initial Covid lockdown.

UK revenues grew c.6% in spite of the ongoing driver and supply challenges, while German revenues in local currency rose c.3% in the face of a competitive online market.

The retailer said the tough market dynamics in both the UK and Germany resulted in lower volumes than expected which affected operational leverage, particularly in the second quarter.

Given the exceptional operating environment over the past 18 months, AO said its performance over the comparable period in H1 2020 [1 April – 30 September 2019] provides a more meaningful overview than a comparison with the same period in 2021.

On a two-year like-for-like basis, Group revenues increased c.66%, with the UK business growing c.63%. Like-for-like revenues in Germany grew c.84% over the same period.

The business has implemented measures in its logistics operations to help mitigate the industrywide issues relating to ongoing supply chain disruption.

In its outlook for the second half of the year the AO said it expects to record a similar growth rate to the first half and anticipates Group Adjusted EBITDA for the full year to be between £35m and £50m, with profits more heavily weighted towards the second half due to the peak trading period.

“Whilst the macro outlook remains uncertain, we have confidence in the proven resilience of our business model and are well placed to meet customer demand in our peak third-quarter sales period,” the company said.

AO World will announce its interim results for the half-year on Tuesday 23rd November 2021.

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