AO World has issued its second profit warning in two months as it continues to be hit by the HGV driver crisis and supply chain shortages of electrical goods ahead of Christmas.
Despite benefitting from the e-commerce boom fuelled by the Covid-19 pandemic lockdowns last year, the company has revealed it made a £10m loss between April and September, partly due to acute shortages in electronics such as Apple’s iPhone and games consoles, as a result of the global shortage of semiconductor chips.
It issued the profit alert at its half-year results yesterday (23 November), which showed it fell to a pre-tax loss of £10.4m from a £17.7m profit a year earlier. This was despite a rise in revenues during the six months to the end of September from £716.6m a year ago to £759.6m.
John Roberts, founder and chief executive of AO, said: “We’re working hard to solve some of the challenges that our industry is facing. We’ve recruited about 500 new drivers and are working closely with our manufacturer partners so that customers can get what they need.”
Roberts also revealed that AO World has had to spend £15m extra on drivers’ wages to make sure it could recruit enough staff to get 1,000 vans on the road each day.
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As Black Friday looms, the company, which began as a white goods online supplier said it was experiencing “meaningful supply chain challenges with poor availability in certain categories, particularly in our newer products where we have less scale, experience and leverage”.
The company also warned that “shipping costs, material input prices and consumer price inflation remain challenging uncertainties”.
This latest profits warning has seen the company’s market value fall from £2.1bn in January to just over £500m today, a loss of three-quarters of its worth.
Despite the profit fall Roberts remained upbeat, insisting the company remains resilient and set to benefit from the continuing increase in online shopping.
