AO swings to half year loss
Online electricals retailer AO has posted a pre-tax loss of £10 million in the first half of its financial year after it experienced a number of challenges relating to a shortage of drivers and global supply chain issues.
This compares to a profit of £18 million in the same period in 2020.
In the six months to 30 September, revenue increased by 6% to £760 million, but was up 67% compared to two years ago. In addition, group EBITDA was down 84% compared to last year, but up 24% over two-year period after growth was impacted by investments in systems, delivery drivers and increased marketing costs.
During the period, AO attracted over 780,000 new customers and recruited 500 new drivers to meet peak period demand. This brought its fleet up to full strength and eased the previously reported shortage of drivers.
AO founder and chief executive John Roberts said: “Our results over this period have inevitably been affected by the constraints and uncertainty seen across our industry. We’ve materially cemented the progress of last year, with a step change in scale and consumer behaviour – and the fundamentals of the business are in place for sustained growth.
“We’re seeing more customers making repeat purchases more frequently across categories. Once they experience the AO Way, they keep coming back. Our outstanding operational capabilities are also being recognised by more and more companies who are now outsourcing their delivery services to us.”
Looking ahead, the company said its current peak trading period is significantly softer than anticipated eight weeks ago. It also said that it is continuing to experience supply chain challenges with poor availability in certain categories and that shipping costs, material input prices and consumer price inflation remain “challenging uncertainties”. As a result, it now expects full year group revenue to be flat to minus 5% year-on-year, with group adjusted EBITDA in the range of £10 million to £20 million.
Roberts added: “While the short-term challenges are clear, I remain hugely optimistic about AO’s long-term growth prospects.”