AO World chief warns of price rises to offset more than £8 million amid the Budget – London Business News | Londonlovesbusiness.com

Founder and chief executive John Roberts of AO World has warned that Labour’s Autumn Budget will cost them £8 million in extra wage costs.

Roberts told the PA news agency they will likely have to increase prices for customers as the wage bill with rise by £4 million and the employers’ national insurance contributions will cost AO World an extra £4 million from next April.

Roberts confirmed they will likely increase prices to mitigate the impact for the online electrical retailer.

“This whole Budget is extremely inflationary for retailers,” he told PA.

“Is anyone naive enough to think that will not follow into pricing?”

“From our point of view, it’s not about cost savings and taking headcount out, it’s about how do we drive efficiencies and how do we grow as a business,” he added.

He said the company are preparing for spending to pulled-back as retailers across the UK will be forced to raise prices because of the Budget which is aimed at raising £40 billion in tax.

“That’s normally what happens in an inflationary environment but, from our perspective, the majority of what we sell is non-discretionary,” said Roberts.

“If your fridge breaks, you’ll probably buy another one.”

AO World reported their annual earnings which saw a strong first half with underlying pre-tax profits climbing 305 to £17 million and revenues saw a 6% increase at £512 million.

Roberts said, “We’ve had a Morecambe and Wise summer sales period – all the right volumes, just not in the right categories.

“The wet summer weather meant we sold fewer fridges and air conditioning units and more tumble dryers than we had planned.

“Overall, our team did a fantastic job to play this out as a satisfying score draw.”