- Electronics retailer AO World’s shares dropped over 18 per cent after reporting slow revenue growth for the first half due to the ongoing nationwide scarcity of delivery drivers and supply chain issues.
- The retail sector had recently warned the government of disruptions ahead of Christmas if the ongoing driver shortage was not addressed in the next 10 days
The UK retail sector has warned the government that it had the next 10 days to address the ongoing lorry driver shortage, as otherwise there may be potential disruption ahead of the Christmas season.
The UK is facing a major fuel crisis due to a shortage of qualified HGV drivers. The shortage has been due to a wider supply chain issue which has impacted several other sectors.
Other than these transient challenges, one major issue for the retailer’s woe has been highlighted of not using innovation due to fear of failing.
A recent survey by market research firm Opinium and customer experience management firm Livearea found that 53 per cent of UK retailers feared making innovations, despite 81 per cent of them stating innovation had gained importance due to the pandemic.
The biggest barriers to retail firms undertaking innovative measures were attributed to a lack of time, company culture and legacy technology, amongst other factors.
Let us take a look at 2 FTSE 250 index listed stocks in the retail sector and explore how they are performing:
- AO World PLC (LON: AO.)
AO World is an online electrical retailer. The company reported, in its latest H1 2021 trading update, that its group revenues rose by around 5 per cent from the year before on a like-for-like basis, and 66 per cent on a two year like-for-like basis.
The company’s UK revenues were up by 6 per cent from the previous year, impacted by UK’s driver shortage. UK revenues rose by 63 per cent on a two year like-for-like basis.
The company has reported that its revenue growth was affected due to the ongoing nationwide scarcity of delivery drivers as well as the disruption in the supply chain on the global level.
The company forecasts its FY 2021 adjusted EBITDA to be between £35 million and £50 million, with revenue growing in the second half in a similar fashion to the first.
The company turned as the highest faller on the LSE’s retail sector as well as the FTSE 250 index following the update.
(Image Source: Refinitiv)
AO World’s shares were trading at GBX 178.00, down by 18.12 per cent on 1 October at 09:28 AM BST. The FTSE 250 index was at 22,845.60, down by 0.81 per cent.
The company has a market cap of £1,042.48 million and has given a negative year to date return of 56.18 per cent as of 1 October.
- Currys PLC (LON: CURY)
Currys PLC is another UK based electrical retail company. The company is owned by UK based multinational electrical and telecom retail giant Dixons Carphone.
The company reported today that it had dropped its kitchen and other related appliances’ prices by over 60 per cent ahead of the autumn sale.
It also leased a retail warehouse property from investment trust BMO Commercial Property (LON: BCPT) on 30 September. The lease is set to expire in March 2022.
The leased property comprised a purpose-built supermarket. It also houses12-pump filling station and an adjoining retail warehouse. The low-cost supermarket Asda has reportedly leased the supermarket.
The combined property deal was worth up to £35.0 million.
(Image Source: Refinitiv)
Currys’ shares were trading at GBX 122.20, down by 8.46 per cent on 1 October at 10:08 AM BST. The retail sectoral index was at 2,849.09, down by 2.07per cent.
The company has a market cap of £ 1,557.22 million and has a year-to-date return of 5.09 per cent as of 1 October.