Online electricals retailer AO World has hiked it annual earnings outlook for the third time in just over three months as it said cost-cutting efforts were paying off.profitability has seen a better-than-expected improvement as it drives cost savings thanks to a “resilient” customer base.Expects underlying earnings to be in the range of £37.5 million to £45 million for the full year, up from the £30 million to £40 million guided for last month.AO World slumped to a £12 million loss in its first half, with shares hammered last year following a series of profit warnings as the cost crisis hit consumer spending on white goods, and due to labour shortages and supply chain disruptionThe company started its turnaround plan with a £40 million fundraising round last summer in a bid to strengthen its balance sheet amid fears of a cash crunch.
AO has closed its loss-making German operation as part of the shake-up and has launched action to save at least £30 million a year by 2023-24 – including by recently axing senior and middle management jobs.
The firm has also ditched unprofitable products while introducing delivery charges and cutting cashback incentives to reduce the cost of sales.
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AO raises profit outlook despite 17.2% drop in UK sales
AO has increased profit expectations, despite a 17.2% decline in sales at its core UK business in the third quarter.
The electricals retailer said this was in line with management expectations.
AO new board member
Ex-Pets at Home chief executive Peter Pritchard join’s AO board as an independent non-executive director
AO loss of £37 Million
Online electrical retailer AO.com posted a full-year pre-tax loss of £37million, compared with a profit of £20million for the same period last year. The group expects sales to fall go £1billion to £1.25billion in its current year, down from £1.56billion last year.The electricals specialist has also signed a new five-year contract with Homebase to supply appliances and installation and recycling services to its customers
AO Pullout from Tesco
The electricals retailer’s first foray into physical retail, AO.com’s in-store trial with Tesco, has come to an end.
In the fall of 2020, the online retailer opened five concessions within Tesco Extra stores. However, Covid lockdowns interrupted the trial, and the shop-in-shops were cordoned off as they were considered non-essential retail.
AO under pressure
AO likely to face pressure of clarifying cashflow position
It faced a cut in credit cover by Atradius, the credit insurance division of Grupo Catalana Occidente
AO recently issued its third profit warning in three months at the end of April.
AO sales fall
AO.com has posted a fall in sales and said it would focus on cash generation in turbulent market conditions.
AO reported that its core UK business had been “resilient” amid a tough trading environment, while its German division suffered.
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