AO warns supply chain ‘disruption’ will trigger profit decline

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AO.com has said that “challenging market dynamics” across the UK and Germany have constrained its sales growth, and that it anticipates a decline in full-year profits as a result.

AO.com recorded a 5% uplift in like-for-like group sales in the six months to September 30, with UK sales up 6% in like-for-like terms.

The retailer said its UK sales growth was hampered by “the nationwide shortage of delivery drivers and ongoing disruption in the global supply chain”.

In Germany, the white-goods etailer’s revenue was up 3% on a local currency basis, but the retailer said that “challenging market dynamics in both the UK and Germany resulted in lower volumes than expected” – particularly in the second financial quarter.

As a result of these constraints, which AO said it has implemented measures to mitigate, it expects sales growth in the second half of the financial year to be broadly level with its first half.

On this basis, AO said it expected full-year adjusted EBITDA to be in the range of £35m to £50m, in comparison with £64m the year prior.

AO, which recorded stellar growth in sales and profits during the pandemic, said that on a two-year basis its like-for-like sales were up 63% and 84% across the UK and Germany respectively.

The government has faced calls to intervene in the current shortage of HGV drivers from across the retail sector.

Last week, plans were unveiled to grant 5,000 extra temporary visas to HGV drivers from overseas in a bid to address the shortage. However, the British Retail Consortium has said this is insufficient to plug the 90,000 shortfall in the retail sector alone.