Thursday 20 September 2018

AO World losses nearly double amid competitive UK market

The firm reported group-wide pre-tax losses of £13.5 million for the year to March 31 against losses of £7 million the previous year.

AO World has seen annual losses nearly double (AO World)
AO World has seen annual losses nearly double (AO World)

By Holly Williams, Press Association Deputy City Editor

Online electricals retailer AO World has seen annual losses nearly double amid competitive trading in the UK and after hefty investment in European expansion.

The firm reported group-wide pre-tax losses of £13.5 million for the year to March 31 against losses of £7 million the previous year.

It said operating losses widened to £16.2 million from £12 million previously, with earnings in the UK plunging 25.4% to £11.6 million after ramping up spend on marketing and due to a “consistently competitive pricing environment”.

It remained deep in the red across Europe, where it has been expanding rapidly, although losses narrowed slightly to £26 million from £26.5 million and it saw revenues in the region surge 54.8% to £116 million.

AO World also cheered an 8.1% jump in UK revenues to £680.8 million, with website sales up 8.7% to £606.6 million.

The group added it remained on track to make its European business profitable by 2021.

Steve Caunce, chief executive of AO World, said: “The new financial year has started well in both the UK and Europe, with UK revenue growth returning to double-digit levels against the prior year.

“Whilst we remain cautious on outlook given economic and competitive pressures on the UK electricals market, we are confident of achieving our stated goals of future growth in the years ahead.”

The group said it reined in marketing spend across the UK over the second half, after sponsoring hit TV show Britain’s Got Talent in the first six months – a campaign which it said “fell short of expectations”.

AO World said despite this, it saw “good growth in a challenging market” over the final six months.

It also plans to launch a new marketing campaign in the UK over the summer.

The results showed that on an underlying basis, group losses widened to £3.4 million from £2.1 million the previous year.

UK underlying earnings fell 7% to £22.6 million from £24.4 million the year before.

Shares in AO World lifted 2% after the results as earnings came in slightly higher than City expectations.

Analysts at Jefferies said the success of AO World’s forthcoming UK marketing campaign would be important to the current year outlook.

They added that while current trading had improved, the overall market was “still a challenge”.

Press Association

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