Online electrical retailer AO World has warned Xbox and Playstation gaming devices and iPhones may be in short supply this Christmas.
A global shortage of computer chips has affected the availability of such items.
AO warned that these shortages and supply chain problems over the trade holiday period would affect its bottom line.
The retailer saw sales increase during the lockdown, but this sprawling growth was halted by higher labor and transportation costs.
AO warned that the key holiday trading period would be “significantly softer” than expected.
On Tuesday, the company posted a half-yearly pre-tax loss of £ 10 million, down from a profit of £ 18 million in six months last year.
On Tuesday, AO’s share price plunged about 25% initially, although it had recovered slightly to fall by about 15% in the late morning.
The nationwide shortage of truckers that has affected many companies remains a problem, AO said.
It had recruited some 500 new drivers to help overcome the labor shortage, but said it still sees “significant supply chain challenges”, product shortages, and higher transport and freight costs.
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“At the start of our financial year in April, we planned for continued revenue growth and built our cost base accordingly,” AO said.
“However, since then, growth in the UK has been impacted by the national shortage of delivery factors and the continued disruption of the global supply chain, and the German online market has seen a significant increase in competition.
“Looking at the second half now, we continue to see significant supply chain challenges with low availability in some categories, particularly in our newer products where we have less scale, experience and leverage.”
Additionally, shipping costs, material costs and consumer price inflation “remain challenging uncertainties,” the company said.
“Round with the white knuckles”
Many companies, from toy, food and clothing retailers to furniture giant Ikea, have warned of labor shortages, higher costs, and supply disruptions.
Over the weekend, tech retailers warned they may have insufficient inventory to meet Black Friday demand due to supply chain delays.
AO World, which sells a wide range of electrical products, including laptops, washing machines and cell phones, said the “all-important” holiday period would be much tougher than it anticipated just a few weeks ago.
The underlying profits for the year to March are expected to be between £ 10 million and £ 20 million compared to a previous forecast of between £ 35 million and £ 50 million issued in October. Profits last year nearly tripled to £ 64m.
Richard Hunter, head of markets at online stocks broker Interactive Investor, called AO’s problems a “thrill ride.”
In addition to supply problems and staff shortages in the UK, he pointed to overseas problems. “The group’s foray into the German market is not only in the early stages of brand creation, but is also facing significantly more competition,” he said.
The drop in AO’s share price, which is now around 105 pence, will prove to be a continuing disappointment for the staff, who were offered a generous bonus scheme in 2020.
Employees would share £ 140 million if the price reached £ 9.41 by 2025 and £ 240 million if it rose to £ 12.55. AO’s highest closing price is around £ 4.30, reached in January.
In October, the government introduced special temporary work visas to attract more foreign workers to the UK.
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