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AO World shares plunge 23% as bosses warn growth hit by driver shortages

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AO World has warned about driver shortages (AO/PA) (PA Archive)
AO World has warned about driver shortages (AO/PA) (PA Archive)

Online white goods retailer AO World has warned its growth is being hit by the nationwide shortage of delivery drivers and ongoing disruption in the global supply chain.

The news sent shares in the company plunging 23% by Friday lunchtime as results failed to meet analyst expectations.

Bosses said sales were up just 5% in the six months to the end of September, including 6% growth in the UK and 3% in Germany.

The company said: “The challenging market dynamics in both the UK and Germany resulted in lower volumes than expected which affected operational leverage, particularly in the second quarter.”

AO enjoyed a strong period during the pandemic as shoppers turned to online retailers for goods. Bosses pointed out that on a two-year basis sales grew 66%.

AO added: “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.”

Underlying pre-tax profits, which strip out one-off costs, are expected to be between £35 million and £50 million, with profits tipped to be weighted towards the second half.

AJ Bell analyst Russ Mould said: “It’s astonishing how fortunes can change in the matter of a year. AO was struggling, then hit the ground running with considerable success, and now it is back to darker times again.

“Online operators were the envy of the retail world as the pandemic took hold, many already having a proven platform capable of meeting extra demand.

“Now being an online operator means having to contend with shortages of drivers to get the goods to the customer, as AO has found out.

“Selling fridges, TV and washing machines online is a low-margin business and success is down to achieving high sales volumes.

“With cost pressures intensifying and sales volumes disappointing, AO faces a big squeeze on profits.”

Several retailers have warned that supply chains are being hit by shortages.

The Government has introduced 5,000 temporary visas for more HGV drivers amid a heavy backlog of people looking to take lorry driving tests, but many in the sector say more needs to be done.

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