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AO revenues fall as supply chain issues take hold

On a year-on-year basis, the group’s revenues declined 6% against the strong prior year comparatives

Online electrical goods retailer AO has revealed its estimated group revenues for the full year to 31 March 2022 are expected to be £1.5bn.

On a year-on-year basis, the group’s revenues declined 6% against the strong prior year comparatives resulting from the robust growth in online purchasing during the Covid-related government restrictions in 2020/21.

On a two-year basis group revenues increased 52%, which the company said “reflects the ongoing structural shift to online retailing”.

Furthermore, group adjusted EBITDA is expected to be around £8m, which it said “reflects the impact of lower sales volumes and higher costs incurred in our UK logistics operations; driver shortages across the industry in H1”.

Available liquidity as at 31 March 2022 was around £50m and its liquidity has since reduced. However, it said it expects that this situation “will improve as we move into Q2 driven by a range of actions that we are implementing”.

The group’s revolving credit facility of £80m was also extended and now expires in April 2024. Net debt at the end of the financial year was £32.8m.

Looking to the future, the company said: “In view of the volatile market conditions, inflationary cost pressures and logistical challenges in the supply chain, together with the escalating cost of living for consumers, we remain cautious about our revenue and profit outlook in the near term.

“In the coming year, we will focus on cash generation to strengthen the balance sheet whilst optimising our cost base to align with the expected lower levels of revenues.”

It added: “Despite the current market challenges, we remain confident in AO’s long-term prospects given the inherent resilience of our business model, the quality of our customer proposition and the ongoing structural shift to online.”

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