4th Jul 2022 10:50
(Alliance News) - AO World PLC shares slumped on Monday after the Sunday Times reported its suppliers have suffered a credit cover cut.
AO World shares fell 14% to 58.65 pence each in London on Monday morning.
The Sunday Times reported that Atradius, a credit insurer, has cut its credit cover for the online retailer's suppliers.
Credit cover is a key part of retail supply chains. It offers cover for firms should customers not pay debts in time, or at all. Without cover, suppliers would seek payments upfront.
Focus will be on AO World's cashflow as a result.
https://www.thetimes.co.uk/article/questions-over-ao-funds-after-insurer-reduces-cover-p0zrb5c8g
Earlier in June, AO World said it will close its German business, potentially booking cash costs of up to GBP15 million in the process, and losing roughly 10% of group revenue.
Exiting Germany means AO World can now "increase its focus on its leading online position in the UK electricals market", the company said.
The closure of the German unit follows a recent period of difficulty for the stock. In late-April, its stock suffered following a warning on supply chain issues and a squeeze on consumer incomes.
AO World said at the time it expects revenue for the recently ended financial year to be GBP1.56 billion, down 6% on the year before as the Covid lockdown-driven online shopping boom unravels.
Also in April, it said Founder & Chief Executive John Roberts decided to dispose of a small part of his stake in the business "on an annual basis". The firm noted that since the group's IPO in 2014, he has maintained his shareholding and increased it with "selected" share purchases.
It is expected Roberts will sell off around GBP5 million worth of shares during the current financial year, representing around 5% of his total stake of 107 million shares, which is a 22% stake in the company.
Back in December, AO World was booted out of London's FTSE 250 index after a quarterly index review.
By Tom Budszus; [email protected]
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