AO World dives under warning of Christmas shortages
Lockdown winner slumps: AO World shares plunge on warning of Christmas shortages over supply chain problems
AO World has warned of shortages of goods this Christmas due to supply chain problems.
The online electronics retailer said a global shortage of computer chips has hit the availability of Xbox consoles, PlayStations and iPhones.
It also said the nationwide shortage of truck drivers remains an issue.
Online electronics retailer said a global shortage of computer chips has hit the delivery of products including Xboxes, PlayStations and IPhones
As such, it now expects a much weaker trading period before Christmas. And in another setback for shareholders, it lowered its annual profit forecast for the second time in two months.
Due to the dismal update, AO World shares fell 14.4 percent, or 17.8p, to 106.2p, meaning it has lost about three-quarters of its value this year.
The company has now given up much of the profits it made during the pandemic as it emerged as a lockdown winner.
Founder and chief executive John Roberts, 48, who owns 22 percent of the company, has lost about £83million on his stake alone this year.
He founded AO World in 2000 after betting £1 with a friend that he could change the way white goods are bought online.
It sells a range of electrical appliances such as laptops and washing machines. During the pandemic, sales rose as families outfitted home offices and kitchens with electrical appliances.
But in October it lowered its outlook on “challenging market dynamics” and said it would make between £35m and £50m in profits for the year.
At the time, AO World said it was mitigating the disruption and had “confidence” going into the peak of the Christmas season.
But yesterday, it said it was still battling “meaningful supply chain challenges,” product shortages and rising prices.
As a result, it further lowered its outlook, expecting annual profits of just £10 million to £20 million, significantly lower than last year’s £64 million.
Roberts said: ‘We have hired 500 new drivers and are working closely with our manufacturer partners so that customers can get what they need.’
Russ Mold, investment director of AJ Bell, said: “After being one of the top performing names in the stock market in 2020 with a price gain of 355 percent, AO World has come back with a shock.”
AO World reported sales of £760 million in the six months to October, up 6 percent from £717 million a year earlier.
But profits fell 84 percent from £28 million to £5 million over the same period as it hastily hired drivers and invested in technology and marketing.