AO slashes profit guidance as product shortages batter festive forecasts

The online electricals retailer warned that “poor availability in certain categories” as a result of such challenges would also lead to “significantly softer” trading during the crucial Black Friday and Christmas period.

As a result, it warned that full-year sales could fall 5% year on year and would be flat at best, while EBITDA would now come in between £10m and £20m. AO had previously forecast EBITDA of £35m to £50m.

AO admitted it was suffering “meaningful supply chain challenges”, with product shortages impacting “newer products where we have less scale, experience and leverage”.

It added that consumer price inflation, and increased costs of shipping and raw materials “remain challenging uncertainties” going into the crucial Black Friday and Christmas trading period.

AO gave the stark warning as it slumped to a pre-tax loss of £10m in the six months to September 30, compared with an £18m profit during the same period last year.

It also slipped £11m into the red on an operating basis, compared with a £16m profit last year.

EBITDA tumbled 84% to £5m during the period despite a 6% uplift in group revenue to £760m.

AO founder and chief executive John Roberts said: “Our results over this period have inevitably been affected by the constraints and uncertainty seen across our industry.

“We’ve materially cemented the progress of last year, with a step-change in scale and consumer behaviour – and the fundamentals of the business are in place for sustained growth.

“We’re seeing more customers making repeat purchases more frequently across categories. Once they experience the AO Way, they keep coming back. Our outstanding operational capabilities are also being recognised by more and more companies who are now outsourcing their delivery services to us.

“We’re working hard to solve some of the current challenges that our industry is facing. We’ve recruited around 500 new drivers and are working closely with our manufacturer partners so that customers can get what they need.”