Refrigerator Tycoon Warning Means Dark Christmas Awaits Us
And no wonder. This is the second time that forecasts have been sharply revised downwards since the beginning of October, giving the impression of a company that suddenly finds itself in the middle of a mounting crisis.
Warnings of “significant supply chain challenges” and “low availability” just weeks before Christmas will send shock waves through Main Street.
None of these issues are exactly new to UK businesses, which begs the question of whether AO World is simply handling them less skillfully than others.
Then again, it’s unrealistic to think that a Greater Manchester white goods supplier can do so much to alleviate global semiconductor shortages, the scarcity of truck drivers, skyrocketing shipping costs and skyrocketing. commodity prices. Only the very big corporate animals like Tesco came out unscathed.
Yet there are several snippets of AO World’s results that will cause panic among other retailers as the crucial holiday season looms. The first is the feeling that its problems are not getting worse, despite the Bank of England stubbornly sticking to its “transitional” inflation line.
Comparative trade is bad enough. After posting a profit of £ 18million midway through last year, he has this time racked up a pre-tax loss of £ 10million. It’s easier to ignore – the pandemic-fueled buying boom that boosted sales last year was always going to be punctual.
Even if you accept the argument that the foreclosure has accelerated the structural change in shopping habits, such levels would never be sustainable once Main Street reopens.
But it is the rapid change in fortunes that will stir up concerns. After revising his profit forecast for the entire year to between £ 35m and £ 50m just eight weeks ago, from a net profit of £ 64m the previous year, he tore up the numbers a second time.
Profits are now expected to be between £ 10million and £ 20million, a significant shortfall in a short time even taking into account the extraordinary macroeconomic circumstances.
Rivals will also be scared off by the kind of products it struggles to source – not so much boring kitchen appliances like microwaves and blenders the chain is best known for, but high-tech electronics. high margin that fly off the shelves. during Black Friday and in the run-up to Christmas – Microsoft iPhones, PlayStations and Xbox.
And a warning that he expects such pressures to continue until the second half of the fiscal year will cause even more concern.
As for Roberts, any angst he might have will no doubt be assuaged by the £ 86million he pocketed when the company went public, and a 23% stake worth nearly $ 140. million pounds, even with today’s squeezed valuations. If things get even worse, he could always follow the Prime Minister’s lead and hide in a fridge until everything collapses.