AO sales fall due to weak demand and supply chain woes

The online electrical goods retailer AO World is preparing for revenues to be even lower
“Despite the current market challenges, we remain confident in AO’s long term prospects,"
// AO.com sees sales fall and announces a focus on cash generation
// The business will delay release of its annual results by up to eight weeks as its continues a strategic review of its German business

The online electrical goods retailer AO World is preparing for revenues to be even lower in 2022 and said it would focus on cash generation after revealing a 6% drop in income.

It warned that “volatile market conditions, inflationary cost pressures and logistical challenges in the supply chain, together with the escalating cost of living for consumers” will affect its performance.

“We remain cautious about our revenue and profit outlook in the near term,” the company said.


READ MORE:


In the coming year the business said it will focus on cash generation to strengthen the balance sheet whilst optimising its cost base “to align with the expected lower levels of revenues.”

AO’s share price dropped 15% on opening this morning, continuing a challenging 15 months that has seen more than 80% wiped off the retailer’s value from its peak at the start of 2021.

The business will delay release of its annual results by up to eight weeks as its continues a strategic review of its German business.

Post covid-19, the group has suffered a shift in consumer trends following its exceptionally strong period two years ago at the peak of the pandemic.

Founder and chief executive, John Roberts also announced he will dispose of around £5m of stock, about 5%of the 107 million shares he owns in the business he took to the market in 2014.

EBITDA is expected to be around £8m, reflecting the impact of lower sales volumes and higher costs incurred in the UK logistics operations, driver shortages across the industry in the first half and significantly higher marketing costs in Germany.

The company added: “Despite the current market challenges, we remain confident in AO’s long term prospects given the inherent resilience of our business model, the quality of our customer proposition and the ongoing structural shift to online.”

Click here to sign up to Retail Gazette‘s free daily email newsletter

3 COMMENTS

  1. Amazon has started to sell white goods and will kill off AO. They should have tried to get into talks with Amazon in the past as they have a great logtistics business for white goods that would have been attractive to Amazon plus they operate in Amsoxns 2 largest European markets of the UK and Germany.

    Amazon is going to start pushing it’s white goods further in the coming months as it looks to take a larger share of this market. Expect more push on furniture after that to try and take away customers from IKEA which charges for delivery.

  2. AO & Amazon helped kill off the bricks & mortar sector, with lots of pressure on the likes of Comet and smaller independent players.

    It will be with little sadness when AO go bust as they discover that margins on home electronics and white goods are far too thin to survive a recession.

LEAVE A REPLY

Please enter your comment!
Please enter your name here