AO World sees revenue surge

Online electrical retailer AO World is expecting half year profit to rise by more than half thanks to strong demand in UK and Germany.

AO's plant in Telford
AO's plant in Telford

The company, which has a major recycling centre in Telford and recently opened a new warehouse in Stafford, said it expected group revenue to rise by 57 per cent year-on-year in the six months to September 30.

UK revenue rose 54 per cent during that time, with German sales up 83 per cent on a constant currency basis.

Although the AO’s competitors began to reopen their physical stores in the company’s second financial quarter, AO said the sales momentum had continued as customers looked to buy online goods due to ongoing Covid-19 concerns.

“We believe we have seen a lasting step change in online penetration,” AO World said.

“During the first half we have seen a change in the behaviour of some customers in our mobile business with increased cashback redemption rates and cancellation of contracts with networks that have negatively impacted our gross margin. We have changed the mix of our customer proposition to minimise this risk in future.”

Looking ahead, AO said it was now on track for its biggest ever peak trading period.

AO founder and chief executive John Roberts added: “The last six months of trading have been like no other during my two decades in the business. AO was in good shape coming into this financial year and the global, structural shift in customer behaviour to online, accelerated by Covid, emphasised our strengths.

“Whilst we remain mindful of the uncertain economic climate caused by the pandemic and Brexit, we are on track with plans and well set for our biggest ever peak trading period in the UK and Germany."

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