AO World, a British online consumer electrical retailer, has announced its plans to increase its full-year earnings forecast after returning to profit in the first half. Despite a decline in sales, the company was able to offset this by reducing costs and improving margins. Inflation is falling while borrowing costs are high, the housing market is slowing, and there is pressure on big-ticket expenditure in the UK.
In the six months to Sept. 30, AO reported a pretax profit of 13 million pounds, compared to a loss of 12 million pounds in the same period last year. This was despite a 12% fall in revenue to 482 million pounds. For the full 2023/24 year, AO expects a pretax profit of 28 million pounds to 33 million pounds, which is an improvement from its previous guidance of around 28 million pounds. The company also anticipates full-year revenue decreasing by approximately 10%.
AO expressed its intention to continue investing prudently in the business and seize significant market opportunities. In June, it formed a strategic partnership with Mike Ashley’s Frasers sportswear and fashion group, making Frasers its biggest shareholder with a 22.1% ownership stake. As a result of this partnership, AO shares have increased by an impressive 60% year-to-date.
Overall, AO World has been successful in taking measures to mitigate declining sales and returned to profitability in the first half of the year. With these positive results under their belt and their continued optimism for future opportunities ahead, AO remains committed to investing wisely in their business while continuing to leverage strategic partnerships like this one with Frasers Sportswear & Fashion Group.