AO World warns of Christmas shortages caused by supply chain issues

AO World warned that there will be shortages this Christmas because of supply chain issues.

According to the online retailer of electrical goods, a shortage of computers chips in global markets has affected availability of Xbox consoles as well as PlayStations and iPhones.

According to the report, there was still an issue with the national shortage of drivers for lorries.

Online electricals retailer said a global dearth of computer chips has hit supplies of products including Xboxes, PlayStations and IPhones

An online retailer of electrical goods stated that a worldwide shortage of computer chip supplies has affected supply of Xboxes, PlayStations, and IPhones.

It now expects a much weaker Christmas trading season. In another blow to shareholders, the company lowered its annual profit forecast twice in two months.

This bleak update caused AO World shares to plummet 14.4%, or 17.8p. It fell to 106.2p. That means it lost around three-quarters of its value for the year.

As a lockdown champion, the company now has to give up many of its gains during the pandemic.

Founder and chief executive John Roberts, 48, who owns 22 per cent of the firm, has lost around £83million this year on his stake alone. 

He set up AO World in 2000 after betting a friend £1 he could change the way white goods are bought online.

The company sells various electrical products, including washing machines and laptops. As families equipped their homes with electric items, sales rose during the pandemic.

But in October it cut its outlook over the ‘challenging market dynamics’, saying it would book profits for the year between £35million and £50million. 

At the time AO World said it was mitigating the disruption and had ‘confidence’ going into the peak Christmas quarter.

But yesterday it said it is still experiencing ‘meaningful supply chain challenges’, shortages of products and rising prices.

As a result it slashed its outlook further saying it expected annual profit of just £10million to £20million, significantly lower than last year’s £64million.

Roberts said: ‘We’ve recruited 500 new drivers and are working closely with our manufacturer partners so that customers can get what they need.’

AJ Bell investment director Russ Mould said: ‘After being one of the best performing names on the stock market in 2020 with a 355 per cent share price gain, AO World has come back to earth with a bump.’

AO World reported sales in the six months to October of £760million, up 6 per cent from £717million a year earlier. 

But its profits fell by 84 per cent in the same period from £28million to £5million as it scrambled to hire drivers and invested in technology and marketing.