AO World dives on warning of Christmas shortages due to supply chain problems
AO World has warned of shortages of goods this Christmas due to supply chain problems.
The online electricals retailer said a global dearth of computer chips has hit availability of Xbox consoles, PlayStations and iPhones.
It also said the nationwide shortage of lorry drivers remained a problem.
Online electricals retailer said a global dearth of computer chips has hit supplies of products including Xboxes, PlayStations and IPhones
As such, it is now expecting a far weaker Christmas trading period. And in another setback for shareholders, it slashed its annual profit forecast for the second time in two months.
The bleak update sent AO World shares plummeting 14.4 per cent, or 17.8p, to 106.2p meaning it has shed around three quarters of its value this year.
The company has now given up much of the gains it made during the pandemic as it emerged as a lockdown winner.
Founder and chief executive John Roberts, 48, who owns 22 per cent of the firm, has lost around £83million this year on his stake alone.
He set up AO World in 2000 after betting a friend £1 he could change the way white goods are bought online.
It sells a range of electrical goods such as laptops and washing machines. During the pandemic sales soared as families kitted out home offices and kitchens with electrical items.
But in October it cut its outlook over the ‘challenging market dynamics’, saying it would book profits for the year between £35million and £50million.
At the time AO World said it was mitigating the disruption and had ‘confidence’ going into the peak Christmas quarter.
But yesterday it said it is still experiencing ‘meaningful supply chain challenges’, shortages of products and rising prices.
As a result it slashed its outlook further saying it expected annual profit of just £10million to £20million, significantly lower than last year’s £64million.
Roberts said: ‘We’ve recruited 500 new drivers and are working closely with our manufacturer partners so that customers can get what they need.’
AJ Bell investment director Russ Mould said: ‘After being one of the best performing names on the stock market in 2020 with a 355 per cent share price gain, AO World has come back to earth with a bump.’
AO World reported sales in the six months to October of £760million, up 6 per cent from £717million a year earlier.
But its profits fell by 84 per cent in the same period from £28million to £5million as it scrambled to hire drivers and invested in technology and marketing.