Online retail giant AO saw its share price plummet by over 20% this morning after warning that its profits were to be hit by supply chain issues.
In a statement to the London Stock Exchange on Friday, the Bolton-based firm said it expected revenue to increase during the second half - but that profits were to be lower than the previous year in part due to the ongoing HGV crisis.
By 11.40am on Friday, AO's share price had tumbled by over 22% - hitting its lowest level in over a year.
READ MORE: Investigation launched into Leicester City and JD Sports over merchandise sales
Responding to the news, Zoe Mills, senior retail analyst at GlobalData, a leading data and analytics company, said: “While other retail categories will be able to satisfy consumers with replacement products, the way that electricals shoppers decide on products makes this more difficult, with specific brands and models being demanded.
"Managing consumer expectations regarding delivery timelines will be essential to appeal in the run up to the festive period, particularly for those ordering items in time for Christmas.
“This announcement has had a rippling effect on the electricals sector, with Currys shares falling 8% as the prospect of higher costs associated with the shortage of delivery drivers and other supply chain constraints weigh on the sector.”
It came after the firm became the next retailer to warn of the ongoing supply chain issues and HGV crisis impacting its sales.
Most Read
While its H1 FY2021/22 results were positive – group revenue was up around 5% against a "strong comparative period" that saw many consumers purchasing big ticket electrical items at the start of the pandemic. The firm is now thought to be entering its second half in a "much more precarious position" with regards to its profits.
Don't miss a thing - sign up for your free North West newsletter - and follow us on LinkedIn
Email newsletters
BusinessLive is your home for business news from around the North West- and you can stay in touch with all the latest news from Greater Manchester, Liverpool City Region, Cheshire, Lancashire and Cumbria through our email alerts.
You can sign up to receive daily morning news bulletins from every region we cover and to weekly email bulletins covering key economic sectors from manufacturing to technology and enterprise. And we'll send out breaking news alerts for any stories we think you can't miss.
Visit our email preference centre to sign up to all the latest news from BusinessLive.
For all the latest stories, views, polls and more - and the news as it breaks - .
AO said its profit forecast will rely on a successful H2, with group adjusted EBITDA forecast to range between £35m and £50m for this current financial year – down from the £64m it reported for FY2020/21.
AO's statement issued to the London Stock Exchange said: "On a one-year like-for-like basis, group revenues for the first half increased c.5% against strong comparatives during the initial Covid lockdown.
"In the 海角视频, revenues over the period increased c.6%, with growth impacted by the nationwide shortage of delivery drivers and ongoing disruption in the global supply chain.
"In Germany, revenues in local currency rose c.3% despite the competitive online market. The challenging market dynamics in both the 海角视频 and Germany resulted in lower volumes than expected which affected operational leverage, particularly in the second quarter.
"Given the exceptional operating environment over the past 18 months, our performance over the comparable period in H120 provides a more meaningful overview of our business performance than a comparison with H121.
Latest Greater Manchester Business News
Don’t miss
"Therefore, on a two-year like-for-like basis, group revenues grew c.66%, with our 海角视频 business growing c.63%.
"Like-for-like revenues in Germany grew c.84% over the same period.
"Whilst we continue to see industrywide issues relating to ongoing supply chain disruption, we have implemented measures to help mitigate these challenges in our logistics operations.
"We expect revenue growth in the second half of the year to record a similar growth rate to the first half of this year and anticipate that group adjusted EBITDA for the full year to be between £35m and £50m, with profits more heavily weighted than usual towards the second half of the year driven by the peak trading period.
"Whilst the macro-outlook remains uncertain, we have confidence in the proven resilience of our business model and are well placed to meet customer demand in our peak third quarter sales period."
AO World is due to announce its interim results for the half year on Tuesday, November 23.