AO World reports strong demand but cautions on outlook
By Sean Farrell
Date: Tuesday 14 Jul 2020
(Sharecast News) - AO World said it experienced strong demand during the Covid-19 crisis but was cautious about the outlook as it reported a smaller annual loss.
The online household appliance retailer's operating loss for the year to the end of March narrowed to £3.8m from £13m as total revenue rose 15.9% to £1.05bn.
AO said the crisis had converted many customers to online shopping but warned that shrinking economies, fewer housing transactions and a hard Brexit could hit sales.
Chief Executive and founder John Roberts, who returned as CEO in early 2019 has been trying to turn AO's loss-making European business into a success while expanding the company's UK operations.
UK revenue rose 20.3% to £901.6m in the year to March and were up 8.2% on a like-for-like basis but European sales fell 4.9% to €165.4m. AO closed its Netherlands website in December and is now concentrating on its German business outside the UK.
Roberts said the Covid-19 crisis increased demand for AO's products and services in the UK as shoppers switched to online purchases but that costs increased because of government social distancing measures and it had some supply problems. Revenue increased above AO's expectations.
Roberts said: "Although it is difficult to predict with certainty, we believe this crisis has had a seismic impact on retail and that many shoppers will have been permanently converted to online shopping. The forced migration to online has presented AO with an opportunity to impress a new customer demographic
"A fall in consumer confidence may lead to a delay in the purchase of big-ticket items. There may also be a significant fall in GDP in both the UK and Germany and the level of UK housing transactions, to which our performance is in part linked, may also decline as a result of restrictions in the mortgage market. There is also an additional level of uncertainty over a hard Brexit in December."
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