AO World warns on revenue because supply chain disruption inhibits growth
Due to the shortage of delivery drivers and the cost of supply chain disruptions hitting transactions, e-tailer AO World lowered its guidance for the whole year, pushing its stock price down by 25%.
The digital white goods retailer listed on the FTSE 250 expects that the group’s revenue for the whole year will be “flat” or down by as much as 5% year-on-year, and the group’s adjusted profit before interest, tax, depreciation and amortization will be between 10 million pounds and 20 million pounds.
AO shares fell by a quarter in early trading on Tuesday, and then narrowed the decline to 13.6% at lunchtime in London, and the annual decline reached 74%.
The online retailer has recruited about 500 new drivers to cope with the shortage, but said in a statement on Tuesday that the transaction was “much lower than we expected only eight weeks ago.”
“We have solved the capacity problem, but obviously the cost of doing so now continues,” said CEO John Roberts. “The annualized operating cost of doing this will add another 15 million pounds.”
Product shortages, transportation costs, price increases and inflation have created “challenging uncertainties.”
Roberts said: “In the past 6 to 12 months, there has been a substantial product inflation of 10% to 12% in the market.” “There must be inflationary pressure on the household budget… People can only assume that it is negative, but To what extent is unclear.”
Last month, the retailer said Growth in the second half of the year Similar to the first one, the adjusted profit before interest, tax, depreciation and amortization for the whole year is expected to be between 35 million and 50 million pounds-about 20% lower than generally expected.
The company said: “At the beginning of the April fiscal year, we plan to continue to achieve revenue growth and establish a cost base accordingly.”
“However, since then, UK growth has been affected by the shortage of delivery drivers across the country and the continued disruption of the global supply chain, and competition in the German online market has increased significantly.”
In the six months to September, the group’s revenue increased by 6% from the same period last year to 760 million pounds. Compared with the same period before the pandemic two years ago, this is an increase of 67%.
“Our performance during this period was inevitably affected by the constraints and uncertainty of the entire industry,” Roberts said.
However, AO stated that the long-term trend is positive. “Now more than 50% of the UK market is traded online,” Roberts said. “The direction of travel is to let it continue to grow.”