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AO sales fall due to weak demand and supply chain woes

// 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.

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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.”

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The post AO sales fall due to weak demand and supply chain woes appeared first on Retail Gazette.



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