AO World stockpiles for Brexit
Written by Peter Walker
AO World has revealed that it is stockpiling £15 million worth of inventory as part of Brexit contingency planning.
The online electrical retailer’s trading update for the year to 31 March explained that during the last quarter, inventory levels were increased to prepare for continued uncertainty around the UK’s exit from the EU.
Group revenue is expected to be circa £900 million, representing an increase of around 13 per cent year-on-year, while UK revenue for the full year 2019 is expected to be £748 million, up 9.8 per cent year-on-year.
Founder and chief executive John Roberts did not address the Brexit stockpiling, but did state: “We have already announced that we are testing a genuinely disruptive rental proposition.
“We have also expanded categories further into garden and DIY ready for the season and we are accelerating AO Mobile to launch later this year in readiness for peak trading.”
Responding to the stockpiling announcement, Wayne Snyder, EMEA vice president for retail industry strategy at JDA, warned retailers to avoid falling into the trap of making a knee-jerk response to the supply disruption Brexit might bring.
“It’s difficult to know exactly how supply chains will be impacted by Brexit, but amid all the short-term uncertainty – the key is to look forward in a strategic manner, and be ready to react quickly as greater clarity emerges.
“Having visibility of the end-to-end supply chain has always been important, but at this time it will prove critical,” he continued, adding: “It will be key for retailers to be able to predict and then quickly react to problems such as understanding additional stock requirements to cover any disruption, or to manage future delays or rising import/export costs.”