AO World is betting that trading over the next six months will help the household appliance online retailer meet full-year profit expectations after a “disappointing” half-year performance.
With lower-than-anticipated major domestic appliance (MDA) sales, AO reported a fall in profit before tax and exceptional items to £6.9 million for its six-month period to the end of September, down from £7.4m the year before.
Meanwhile, overall the group narrowed pre-tax losses to £5.4m from £6.3m the year before.
One broker, Peel Hunt, said that AO World would have to make more than £9m in earnings in its second half trading period to meet the results the board has promised shareholders.
The broker called the results “disappointing”.
AO chief executive Steve Caunce: “While our core UK and Germany MDA markets have been challenging, with the UK MDA 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.
“Elsewhere, our continued focus on growing our range of online electricals and adding new complementary ranges proved successful in the first six months of the year, with newer categories such as audio visual and computing performing particularly well.
“Similarly, we are excited about further strengthening our customer offer through the acquisition of the UK’s leading online-only mobile phone retailer, Mobile Phones Direct.”
He added: “Satisfaction metrics remain very strong, and awareness of the AO brand has further improved through the recent launch of our ‘Delivering Tomorrow’ campaign.”
The Bolton company, which said operating profit in the UK almost halved to £1.1m, from £2.5m the year before, is making a concerted effort to reduce its reliance to the weak appliance market.
One way it is doing that is to leverage its iconic green fleet to deliver furniture for third-party retailers.