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AO World sees growth hit by delivery driver shortages and supply chain disruption

AO World says growth in its UK business has been hit by shortages of delivery drivers and disruption in the global supply chain. Sales volumes were lower than expected in both its UK and German market as a result of “challenging market dynamics”. 

Those market dynamics include a shortage of HGV drivers that the Road Haulage Association has put at 100,000. The UK is now making 5,000 visas available to European drivers who can no longer work in the UK post Brexit to fill the gaps in the run up to Christmas.

AO group sales in the six months to September 30 grew by 5% against the same time last year, the retailer said in a trading statement today. In the UK, sales were 6% up on last year, and in Germany they were 3% ahead.  

AO says that the comparison with last year is against a strong performance in the Covid-19 lockdown. The retailer has previously said that the electricals category moved online permanently during the Covid-19 lockdowns of the last year. Compared to the same time a year earlier, group revenues in the latest half-year are 66% ahead, with sales up by 63% in the UK and by 84% in Germany. 

“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,” AO World says in today’s trading statement. Looking ahead it now expects revenue growth in the second half of the year to be at a similar level to the first half, and that earnings before interest, taxes and one-off costs will come in at between £35m and £50m, “with profits more heavily weighted than usual towards the second half of the year, driven by the peak trading period.”

It adds: “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 is a Top100 retailer in RXUK Top500 research.

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