Product shortages and surging costs caused by supply chain problems are set to hit peak festive trading at AO World

Online electricals retailer AO World has warned that product shortages and surging costs caused by supply chain problems are set to hit peak festive trading.

The group revealed the UK’s lorry driver crisis and global supply issues took its toll on half-year figures as it sank to a £10 million pre-tax loss in the six months to September 30 against profits of £18 million a year ago.

Underlying earnings slumped to £5 million from £28 million a year earlier.

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AO World has recruited around 500 new drivers to help it overcome the labour shortages but said it was still seeing “meaningful supply chain challenges”, product shortages and higher costs of transport and freight.

The group revealed the UK’s lorry driver crisis and global supply issues took its toll on half-year figures as it sank to a £10 million pre-tax loss in the six months to September 30 against profits of £18 million a year ago.

It cautioned that key Christmas trading is now expected to be “significantly softer” than expected, which is set to leave full-year revenues either flat or down 5%, and group underlying earnings in the range of £10 million to £20 million.

AO World said: “At the start of our financial year in April, we planned for continued revenue growth and built up our cost base accordingly.

“However, since then, growth in the UK has been impacted by the nationwide shortage of delivery drivers and the ongoing disruption in the global supply chain, and the German online market has seen significantly increased competition.

“As we now look to the second half, we continue to see meaningful supply chain challenges with poor availability in certain categories, particularly in our newer products where we have less scale, experience and leverage.

“In addition, shipping costs, material input prices and consumer price inflation remain challenging uncertainties.

“As a result of these factors, the all-important current peak trading period is significantly softer than we anticipated only eight weeks ago.”