AO World reviews German business amid supply issues and increased competition

AO World

Online electricals retailer AO World is reviewing options for its German business as supply chain issues and marketing costs impact revenues.

Over the nine-month period to the end of December 2021, revenues in its German arm declined by 8% triggering a strategic review of the business.

It said the German arm faced several material changes including competition in the online market which has intensified whilst online penetration has returned to pre-pandemic levels.

It said digital marketing costs have “substantially increased” against pre-pandemic levels and supply remains constrained.

It expects these challenges to continue for the foreseeable future in the German market.

The board said the results of the strategic review, which will evaluate a range of options, will be announced in due course.

In the UK revenues remained broadly stable, despite supply chain constraints and driver shortages.

Shares at AO dropped by nearly 7% this morning and were trading at 99.7p per share.

In a stock market update this morning the group said: “We remain confident about AO’s long-term growth prospects, driven by the strength of our proven business model, the quality of our customer proposition, and the long-term market trend towards online migration.”