Sat. Nov 27th, 2021

Electronic retailer AO World downgraded its lead for the full year, dropping its shares by 25 percent as delivery manager shortages and supply chain disruption hit trades.

AO, an FTSE 250-listed digital white goods retailer, expects full-year group revenue to be “shallow” to minus 5 per cent year-on-year, with group-adjusted earnings before interest, tax, depreciation and amortization in the £ 10m range up to £ 20 million.

Shares in early London trading lost a quarter of their value on Tuesday, taking their decline for the year to 78 per cent.

The retailer’s current trading period is “significantly softer” than expected, as shortages of delivery managers and supply chain disruption have hit UK growth.

AO said this last month second half growth will be similar to the first, with adjusted earnings before interest, tax, depreciation and amortization for the full year expected to be in the £ 35m to £ 50m range – about 20 per cent below consensus expectations.

Line chart of pennies per share showing AO World shares falling

“Because of these factors, the extremely important current peak trading period is significantly softer than we expected just eight weeks ago,” the group said in a statement on Tuesday.

“At the beginning of our financial year in April, we planned for continued revenue growth and built up our cost base accordingly,” it reads.

“Since then, however, growth in the UK has been affected by the nationwide shortage of delivery drivers and the continuing disruption in the global supply chain, and the German online market has experienced significantly increased competition,” the group added.

Group income increased by 6 percent in the six months to September compared to the same period last year. It was 67 percent higher compared to the same pre-pandemic period two years ago.

Product shortages, shipping costs, rising prices and inflation have caused “challenging uncertainties”, the group said.

“Our results over this period have inevitably been affected by the constraints and uncertainty seen in our industry,” said CEO John Roberts.

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