AO World shares plummet 17 per cent as EBITDA dips
Leading online electrical retailer AO World has seen its share price plummet after publishing lukewarm post close trade results.
AO World’s share price slipped by 17.57 per cent compared to yesterday’s close price with shares trading at 179.2p after the company revealed that supply chain disruption had affected intake in the first half of the year.
The FTSE-250 retailer expects full year EBITDA of between £35m and £50m – a sharp drop compared to bumper 2020 results of £64m.
“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,” the company said in a statement.
The comments come as UK retailers continue to be buffeted by supply chain and staff shortages which are disrupting deliveries of goods including food and fuel.
With the ongoing difficulties the company was unable to maintain momentum from surging interest in online shopping and tech seen during the pandemic which saw AO World attract 2m new customers, take revenue of £1.6bn and grow profits after tax to £20m, up from £1m a year prior.
Commenting on the results Neil Wilson, Chief Market Analyst for Markets.com said “AO World needs high double-digit revenue growth to justify its valuation.
“Margins in a highly commoditized business were always a problem and now the supply chain woes coupled with a shortage of drivers creates some serious headwinds for the stock,” he added. “It now faces some new challenges which seem set to perform the double trick of hammering margins and lowering revenue growth.”
While the electricals company, which is headquartered in Bolton, is still performing strongly compared to pre-pandemic with half year revenues up by 66 per cent, growth has reversed amid flagging demand and logistical difficulties.
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