Shares plunge 46% for AO World
AO World, the online white goods and TV retailer has made a shock warning on profits after tougher-than-expected trading, causing shares to plunge by 46%.
The Bolton-based group said sales in the fourth quarter were weaker than had been expected and would mean it would miss forecasts for the year to March 31.
It warned that results would be “slightly below” market expectations as a result of poor performance in its UK business – blaming the publicity around its IPO.
AO said it was finding it “difficult” to achieve expected sales growth in the fourth quarter of the 2015 financial year and this was affecting earnings.
It blamed the lower growth rate in the current financial year on the “extra publicity” surrounding the company in the second half of the last financial year and going into this financial year as it prepared to float.
The loss of a logistics contract, the impact on costs of driver legislation changes and the adverse effects of Black Friday, “which did not produce incremental sales, but condensed sales into a shorter time period” are likely to result in revenue for the UK operations of around £470m-£475m and adjusted ebitda of £16.5m.
Seeking to reassure investors after this setback, the company said: “The board of AO is confident that the company’s fundamental business model remains strong and AO is continuing to deliver on its strategic objectives: trading in Germany, the new market entered six months ahead of plan, is advancing well and other territories are continuing to be assessed for further international expansion, while the introduction of the AV category in the UK is developing well.”
Founder and chief executive John Roberts said: “AO has experienced tougher than expected trading conditions in the final quarter of the year, as compared to Q4 in FY2014.
“While we are disappointed that sales and profits are going to come in slightly below expectations, we remain committed to our market-leading, customer-focused business model.
“We continue to redefine retailing in our chosen categories with unbeatable prices, huge range and availability, complemented by amazing service. Having delivered on all our strategic objectives through this financial year, we are confident of our ability to continue to deliver for our customers and to further drive the success of AO in the interest of all stakeholders.”
