AO World tipped to post poor results ahead of FTSE 250 departure


AO World will report its last set of results as a FTSE 250 firm on Tuesday, with analysts expecting a bad week for the company to get worse as it posts another set of annual losses.

The online electricals retailer looks set to reveal losses within a range of £5.9 million and £9.2 million for the year ending March 2017, compared to a £6.7 million loss in 2016, according to consensus figures.

The firm has been grappling with a jump in import costs following sterling's slump, while rising inflation has put the squeeze on consumer spending.

Shares in the company have plunged 62% since its listing in 2014, resulting in it being earmarked for demotion from the second tier to the small cap index in the latest FTSE reshuffle.

George Salmon, equity analyst at Hargreaves Lansdown said: "To be fair to AO, not all of the headwinds it is facing are its own doing. Sterling's weakness means importing electricals is now more expensive, while worries over the UK economy will have also had an impact.

"After all, demand for big ticket items can be volatile, and is prone to wax and wane with the fortunes of the economy.

"After already confirming a weaker than expected second half performance in its most recent trading update, we'll be keeping an eye on the group's progress in Europe, where the profits from the more established UK business are being re-invested."

AO World swung to a £2.3 million pre-tax profit when it reported half-year results in November, with turnover rising 23% to £324.7 million over the period.

The business will be relegated to the small cap index from the start of trading on June 19

Meanwhile, retailer WH Smith will reveal if sales at airports and railway stations have continued to offset falling high street trade when it updates on Thursday.

The group saw like-for-like sales fall 3% at its main store estate in the six months to February 28 as it came up against tough comparatives from a year earlier amid booming demand for adult colouring in books.

But sales surged 5% in the travel division, with air passenger traffic in particular holding up well despite the pound's plunge, helping earnings in the division lift 11% to £39 million.

This helped half-year profits rise 4% to £83 million, while overall revenues grew 2%.

Analysts at Numis Securities said third quarter figures may be helped as comparatives from a year earlier become easier.

WH Smith has seen the "colour therapy" trend wane in recent months, but it said at the half-year stage that this was being offset by the rising popularity of spoof humour books and strong stationery sales.

Cost cuts are likely to continue being a strong focus, with another £3 million of savings earmarked for the second half, bringing the full-year total to £10 million.

WH Smith employs around 14,000 staff and has 613 high street stores and 790 outlets in the travel arm.