Lockdown winners crash: AO World shares dive on Christmas deficit warning due to supply chain issues
AO World warned of shortage of goods this Christmas due to supply chain issues.
The online electrical retailer said the global shortage of computer chips hit the availability of Xbox consoles, PlayStations and iPhones.
The lack of lorry drivers across the country remains a problem, it said.
The global electrical shortage of computer chips has hit the supply of products including Xboxes, PlayStations and iPhones, the online electrical retailer said.
As such, it is now expecting a fragile Christmas trading period. And in another setback for shareholders, it slashed its annual profit forecast for the second time in two months.
The bleak update saw AO World’s shares fall 14.4 per cent, or 17.8p, to 106.2p, three-quarters of its value this year.
The company has now abandoned most of the profits it earned during the pandemic of becoming a lockdown winner.
Founder and chief executive John Roberts, 48, who owns 22 per cent of the firm, has lost nearly £ 83 million on his stake this year.
He founded AO World in 2000, after changing his way of buying white goods online after betting £ 1 on a friend.
It sells a range of electrical goods, such as laptops and washers. During the epidemic, sales skyrocketed as families kitted out household appliances and kitchens with electrical appliances.
But in October, it cut its focus on ‘challenging market dynamics’, saying it would save between £ 35million and £ 50million a year.
At the time AO World said it was mitigating the disturbance and had ‘confidence’ in the Christmas quarter.
But yesterday it said it was still experiencing ‘meaningful supply chain challenges’, shortages of products and rising prices.
As a result it further cut its view that it was expecting annual profits of £ 10million to £ 20million, significantly lower than last year’s £ 64million.
Roberts said: ‘We have hired 500 new drivers and are working closely with our manufacturer partners so that customers can get what they want.’
Russ Mold, AJ Bell’s investment director, said: ‘After becoming one of the best performing names in the stock market with a 355 per cent share price return in 2020, AO World is back on earth with a bump.’
AO World reported six-month sales of £ 760million from October to October, up 6 per cent from £ 717million a year earlier.
But its profits fell 84 per cent to £ 5million from £ 28million in the same period because it hired drivers and invested in technology and marketing.