Rise of TVs and dryers boosts AO World profits: Electricals company boosted by long, wet winter

Online electrical goods company AO World has enjoyed a near tripling of profits after a long, wet winter boosted sales of tumble dryers.

The company, which has undertaken a massive cost-cutting regime, said TV sales also increased with Euro 2024.

Profits rose to £34.3m in the 12 months to the end of March, an increase of 186 per cent on the £12m recorded a year earlier.

AO World, which sells 15 per cent of all household appliances in the UK, said tumble dryers were among its biggest sales over the winter due to prolonged heavy rain.

This year, the UK experienced the eighth wettest winter on record, with rainfall 29 per cent higher than the seasonal average.

But shoppers are also spending money on new TVs (sales this month were 54 percent higher than in June last year) to enjoy a summer of sports, including the European Championship and the Paris Olympics.

AO founder and chief executive John Roberts said: ‘We have made good progress in our profit performance… which is a testament to the success of our strategic pivot to focus on profits and cash generation. Now we are a much simpler and more efficient company.”

AO’s profits over the previous two years were severely hit by falling sales and by consumers ending warranties earlier than usual to save money.

The group was also hit by supply chain issues, labor shortages and the return of Brits to stores to buy appliances following the end of Covid restrictions.

But the company has been on a cost-cutting mission amid concerns about consumer belt-tightening.

As part of its overhaul, it made cuts to its workforce, particularly among senior and middle managers, and also closed several offices.

The company exited the German market in 2022 and removed lower-value products from its range, as well as introducing delivery charges as part of a plan to improve profitability.

This meant the group’s revenues fell by 9 per cent to £1bn.

Richard Hunter, an analyst at Interactive Investor, said the latest results show how these “difficult but necessary” stocks are “turning up.”

The shares rose 1.1 per cent, or 1.2p, to 114.2p. However, the price is still well below its 2014 float level of 285p, as well as its 2021 pandemic peak of 400p.

Marks Electrical posted record annual sales but profits slumped as cash-conscious shoppers upgraded their appliances.

The London-listed group said it was overwhelmed because consumers “remain very concerned about prices”.

Profits reached £5m in the year to the end of March, down 33 per cent on the previous year. It came despite the company posting record sales for the year, with revenues up 17 per cent to £114m.

The shares rose 2.1 per cent, or 1.5p, to 72p.