AO World set to narrow losses as sales increase

AO World is expected to narrow its underlying losses on Tuesday as it reports its first annual results since the return of its founder to the position of CEO.

Underlying earnings are set to come in at the lower end of analyst expectations with a £400,000 loss before interest, tax, depreciation and amortisation for the year to the end of March.

This compares with underlying losses of £3.4 million last year.

Analysts at Numis anticipated a pre-tax profit of £13 million, down from £16 million last year.

The company previously warned that a management reshuffle under founder John Roberts, who swooped back in to take the helm in January, would result in around £2.5 million of extra costs.

Revenue is on track to increase by around 13% to £900 million, including a boost from the recently acquired Mobile Phones Direct business.

The City will be on the lookout for further updates on Brexit, following the business’s decision to stockpile £15 million of goods, in a move Mr Roberts told the Press Association was “a waste of money”.

All eyes will also be on Mr Roberts’ leadership as he leads efforts to reinvigorate the business.

Analysts at Whitman Howard Research said: “Our overall view is that he is motivated to re-energise the business over so long as it takes and to protect the value of his investment.

“Proprietorial management is not to everyone’s taste. But we think that some impatience with performance is a good thing here.”

Mr Roberts jumped back into the hot seat in January after chief executive Steve Caunce quit to “step back to a less demanding business role”.

The FTSE 250 firm, headquartered in Bolton, has been battling against tough markets in the UK and Germany as economic uncertainty holds consumers back from making big-ticket electrical goods purchases.

Shares hit an all-time low of 86.68p in April after the company warned that its profit would be at the lower end of expectations.

On Friday lunchtime, the stock was trading at 110.8p.