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AO World says UK appliances market declining
[LONDON] British online electricals retailer AO World reported another first-half loss on Tuesday, with revenue growth held back by lower than anticipated sales for large domestic appliances such as fridges and washing machines.
AO, which operates in the UK, Germany and the Netherlands, reiterated guidance it gave earlier this month when it announced the purchase of Mobile Phones Direct, that full year results will fall within the range of its expectations, albeit more second half weighted than previously anticipated.
The group, which is profitable in Britain, has a target to make its European operations profitable by 2021.
AO also said its stock days may increase in the short to medium term as it looked to mitigate any friction in the supply chain that Brexit may cause.
The group made an adjusted loss before interest, tax, depreciation and amortisation (EBITDA) of 5.4 million pounds (S$9.46 million) in the six months to Sept. 30, versus a loss of 6.3 million pounds in the same period last year.
Total revenue increased 9.9 percent to 404.2 million pounds, with UK growth of 5.7 per cent and growth in Europe of 35 percent.
"While our core UK and Germany MDA (major domestic appliance) markets have been challenging, with the UK MDA market becoming tougher than expected, we take encouragement that we are at least maintaining market share in this core category in the UK and growing significantly in Germany," said Chief Executive Steve Caunce.
He noted that AO was performing well in newer categories, such as audio visual and computing.
The group's peak trading period began on Nov. 9 with the launch of its Black Friday promotions.
Shares in AO, down 29 per cent over the six months, closed Monday at 124.2 pence, valuing the business at 569 million pounds.