AO raises full year profit guidance
AO World has raised its full year profit guidance following a return to profit in its first half.
In the six months to 30 September, the online electricals retailer posted a pre-tax profit of £13 million compared to a loss of £12 million a year earlier. This came despite a 12% drop in revenue to £482 million.
Meanwhile, EBITDA climbed to £27 million from a previous £9 million.
AO attributed the rise in profit to the removal of unprofitable sales and the introduction of delivery charges on all deliveries. In addition, the retailer maintained tight control of advertising and marketing costs and reduced its warehouse costs to 5.3% of sales from 5.7% a year earlier. Other administrative costs decreased by £9.4 million to £56 million in the period.
During the half year, AO attracted 290,000 new customers and also saw an increase in its repeat customer purchase percentage rate.
AO founder and chief executive John Roberts said: “I am very pleased with the clear progress that we are making as a result of our strategic pivot to focusing on profit and cash. We have generated more profit in the first half of this year than we did in the whole of last year, and are also upgrading our profit expectations for the remainder of FY24.
“As we anticipated, sales have reduced year on year as we continue to annualise the actions that we’ve taken to remove non-core channels and unprofitable sales from the business. However, we expect to end the year having returned to run rate revenue growth.”
AO is now forecasting a full year profit of between £28 million and £33 million. This compares to a previous guidance of £28 million.
Roberts added: “We look forward with cautious optimism, given the macro challenges, as we turn our attention back to delivering profitable revenue growth to drive our operational gearing.”
