- AO World revealed that adjusted pre-tax profits rose 186% to £34.3m last year
- The Bolton-based company increased gross margins by 2.5 percentage points to 23.4%.
AO World’s annual profits have soared as price increases helped the group offset lower revenue to achieve higher margins.
The online electronics retailer revealed that adjusted pre-tax profits rose 186 per cent to £34.3 million in the year to March, well above its guidance of between £28 million and £33 million. .
The Bolton-based company increased gross margins by 2.5 percentage points to 23.4 per cent by increasing prices and removing “non-core” channels and loss-making sales.
Delivery: Online electronics retailer AO World revealed that adjusted pre-tax profits rose 186 per cent to £34.3 million in the year to March.
However, this contributed to the FTSE 250 company’s overall turnover declining by around £100m, or 8.7 per cent, to £1bn.
Revenue was further affected by cost of living pressures which affected consumer demand in the electrical goods sector and difficult conditions in the market for new mobile phone contracts.
AO said “intense” competition to attract mobile customers led them to offer “unsustainable discounts” to try to gain market share.
However, the company praised an “excellent earnings performance,” with CEO and founder John Roberts calling it “a testament to the success of our strategic shift to focus on profits and cash generation.”
He added: “We are now a much leaner, more efficient company and are delivering better results than ever for customers, with excellent and sustainable unit economics.”
AO’s profits over the previous two years were severely hit by declining 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 Britons to buying appliances in stores following the end of Covid-19 restrictions.
Under a turnaround plan, the company closed numerous offices, closed operations in Germany, reduced cashback incentives, began imposing delivery charges and launched a £40m fundraising to improve its balance sheet.
This has failed to significantly revive AO shares, which have plunged around three-quarters from their peak of over 430p in January 2021.
AO World shares They rose 1.8 per cent to 115 pence early on Wednesday afternoon.
For next year, AO expects to achieve double-digit revenue growth and between £36 million and £41 million in adjusted pre-tax profits.
Julie Palmer, a partner at Begbies Traynor, said good weather, caps on energy prices and moderating inflation meant there was “some cautious optimism for the consumer”.
He added that the extensive summer sporting calendar, including the Paris Olympics and the European Football Championship, “could encourage fans to consider upgrading their home set-up, which could mean more good news.”
John Roberts founded AO in 2000 after a friend bet him £1 in a pub that he couldn’t set up his own business.
Among the products the company sells are laptops, televisions, refrigerators, washing machines, smart doorbells and vacuum cleaners.
