AO in the red after European investment
AO World, the online white goods retailer, has swung to a bottom-line loss in the first half after continued investment in European expansion.
The Bolton-based company said its progress in its first overseas market, Germany, had given it the confidence to launch in the Netherlands earlu in 2016.
As a result of losses from the German launch, the company slipped to an operating loss of £8.9m in the six months to September 30 on revenue up 21.7% to £264.3m. A year ago it reported a profit of £900,000.
AO, which sells everything from washing machines and fridges to vacuum cleaners and TVs, said it did not expect its Dutch launch to have a material impact on group adjusted earnings although it would incur some early set-up costs.
Chief Executive John Roberts said the move to the Netherlands would help leverage its investment in Germany, where it plans to open a regional office and distribution centre in 2016. AO World is also considering entering other adjacent markets, he said.
Its UK revenue grew 14.5%, more than double the rate of 6.5% in the three months to June 30. It said the second half had started well although noted it still had peak trading ahead of it, including Black Friday later this week.
Roberts, the company’s founder, was typically bullish, stating: “AO World has made good progress in the first half, continuing to deliver on our long-term strategy. We have continued our mission to redefine retailing in our chosen categories, and we are winning market share in all those categories.”
He added: “It is clear that the momentum we built in the second quarter has set us up well for the full year. We remain as confident as ever that the market dynamics are moving in our favour as a pure-play digital operator in a market where customers continue to move rapidly online and our excellent service will only accelerate this. Against that backdrop we are well placed to deliver sustainable long-term growth.”
AO World listed on the Stock Market at 285p n February 2014 and peaked at 412p. The stock slumped after a profit warning in February and hit an all time low of 120p.
