Cautious AO World posts rising sales amid challenging times

AO World has seen sales rise and losses narrow, but warned that a “challenging” market would see the online firm rely on its second half performance to meet annual expectations.

The online electricals retailer posted an £11.7 million operating loss in the six months to September 30, down from £12 million in the same period last year.

Revenue for the period increased by 9.9% to £404.2 million, but the firm said the results come amid a “challenging backdrop” in its core UK and German markets.

AO chief executive Steve Caunce said: “This has been a half of continued delivery against our long-term strategy, thanks to a strong offer for customers.

“While our core UK and Germany major domestic appliances markets have been challenging, with the UK major domestic appliances market becoming tougher than expected, we take encouragement that we are at least maintaining market share in this core category in the UK and growing significantly in Germany.

“We expect full year results to fall within the range of board expectations, albeit more second half weighted than previously anticipated.”

AO website sales in the UK grew 4.2% to £294.3 million, with growth coming from newer categories such as audio visual and computing.

Total UK revenue was up 5.7% to £334.8 million, while Europe revenue for the period increased by 35% to 78.4 million euro (£69.8 million).

Mr Caunce added: “While we faced some operational challenges with our driver model in Germany which had an effect on our second quarter we expect to return to our targeted growth levels in Germany over the next few months.

“Our peak trading period began on November 9 with the launch of our biggest ever Black Friday and I remain confident of achieving long-term sustainable growth across the group.”