Online retailer trading to expectations and ready for Brexit

Bolton-based online electrical retailer AO World said its annual performance is within expected market forecasts, and it has prepared for Brexit.

Revenues for the year to March 31, 2019, are expected to be around £900m, which represents an increase of approximately 13% year-on-year, or up 9% excluding Mobile Phones Direct (MPD).

The group adjusted EBITDA, excluding exceptional costs, is expected to be at the lower end of market expectations, however.

UK revenue is expected to be around £748m, up 9.8% year-on-year, and up 5.4% excluding MPD.

Today’s trading upate also stated that the integration of MPD is on track and progressing to plan.

Europe revenue growth is expected to be 32.3% for the year in local currency at around €174m (32.1% in pounds sterling).

The statement said: “As part of our Brexit contingency planning, during the last quarter of FY19 we increased our usual core fast moving inventory levels by c.£15m, with a corresponding impact on our cash position.

“This will help ensure we can continue to deliver our market-leading proposition to our customers.”

Following the re-appointment of John Roberts as chief executive in January 2019, the group has restructured its management team and, as a result of this, together with charges for a loss making contract which AO World is unable to terminate in Germany, it anticipates incurring exceptional costs in the region of £2.5m.

These costs are in addition to previously disclosed one-off costs incurred in connection with the acquisition of Mobile Phones Direct in December 2018, and exceptional share-based payment charges.

Further details will be disclosed in the preliminary statement on June 4.

John Roberts, founder and chief executive, said: “Over the last eight weeks we have created a mindset shift from the numbers delivered in FY19; we are setting about realising our opportunities with pace and energy.

“I am delighted by the reaction of AO’ers and their passion for our future.

“We have already announced that we are testing a genuinely disruptive rental proposition.

“We have also expanded categories further into garden and DIY ready for the season and we are accelerating AO Mobile to launch later this year in readiness for peak trading.”

He added: “I am delighted to once again have the privilege to lead the business and excited by the scale of value creation that lies ahead of us for the benefit of all stakeholders.

“I look forward to updating more fully in early June on how we are accelerating our plans to grow while leveraging the infrastructure we have invested in.”