AO World founder condemns Brexit costs as ‘wasted’ money
The founder and boss of online retailer AO World has condemned the group’s hefty bill for no-deal Brexit planning as “wasted” money after revealing £15 million of stockpiling efforts.
John Roberts, who recently swooped back in to take the helm after a two-year hiatus, said the group had invested heavily and has “done everything we can” to prepare for a chaotic Brexit, both in the UK and Germany, where it launched in 2014.
But the no-nonsense northerner told the Press Association the cash could have been better spent elsewhere.
He said: “We feel very ready and have spent a lot of money. I’d class that as wasted a lot of money.”
Mr Roberts added: “We could have invested that money on much (more) positive things.”
The retailer – which imports the majority of its electrical goods – recently confirmed it has boosted stocks of its most popular products by around £15 million in the past three months to prepare for Brexit.
It came as the group also warned it was likely to slump to an underlying loss for the year to March 31.
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 Bolton-headquartered firm has been battling against tough markets in the UK and Germany and slumped to an £11.7 million operating loss for the six months to September 30.
Its shares have fallen to all-time lows, having plunged 36% in the past six months.
Mr Roberts said Brexit had “without a shadow of a doubt” been a significant factor in recent trading challenges.
He said the market is down by at least 15%, having been hit hard since the EU referendum nearly three years ago.
Electricals are largely imported, which meant the pound’s plunge since the Brexit vote has sent costs soaring.
The sector’s fortunes are also closely linked to the housing market, with many white goods purchases made alongside house moves, but this has stalled as buyers sit on the sidelines waiting for Brexit clarity.
Its recent full-year trading update saw the group warn that underlying earnings are set to come in towards the lower end of City expectations – for between a loss of £400,000 to a profit of £2 million.
But Mr Roberts said he had “lots of reasons to be cheerful”, with a raft of new initiatives, including plans to launch its mobile phone offering within months.
AO Mobile will launch in the summer, with the group using its recent £32.5 million takeover of the Mobile Phones Direct business as a launchpad for the new operation.
The firm also recently unveiled its first step into the white goods rental market.
It is trialling the scheme with two housing associations in England and Scotland, offering cash-squeezed millennials the option to rent a washing machine for £2 a week.
Mr Roberts – who founded AO World in 2000 and still owns a 23% shareholding – said he is “absolutely loving” being back in charge.
Since handing over the reins to Mr Caunce in February 2016, he had been focusing on innovation and development projects, although he has remained on the board.
“I have been involved, but there’s nothing quite like being right at the cut and thrust.
“It’s a class A drug all of its own,” he said.