AO World cuts profit forecast again

AO World has cut its profit forecast for the second time this quarter, amid supply chain issues and rising costs.

Although the company saw a successful year over lockdown, it is showing growing concerns around global shipping and product shortages.

Revenues at the electrical goods retailer could be down 5% this year. Expected profits for the year fell from £35m-£50m that was forecast just eight weeks ago to £10m-20m.

“At the start of our financial year in April, we planned for continued revenue growth and built up our cost base accordingly. However, since then, growth in the UK has been impacted by the nationwide shortage of delivery drivers and the ongoing disruption in the global supply chain, and the German online market has seen significantly increased competition,” said the retailer in a statement.

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“As we now look to the second half, we continue to see meaningful supply chain challenges with poor availability in certain categories, particularly in our newer products where we have less scale, experience and leverage. In addition, shipping costs, material input prices and consumer price inflation remain challenging uncertainties.”

“As a result of these factors, the all-important current peak trading period is significantly softer than we anticipated only eight weeks ago.”

In the first half of the year, the group made a pre-tax loss of £10m. This is compared to £18m profit the year previously.

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