AO World eyeing Europe for new growth markets

Oliver Smith
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ONLINE white goods retailer AO World is eyeing up Belgium and the Netherlands after building out its infrastructure in Germany faster and cheaper than expected.

The group yesterday reported half-year revenues that jumped 25 per cent to £217.1m during the six months to 30 September, while profits fell to £779,000, from £2.14m during the same period last year due to the costs of setting up in Germany.

“We’re six weeks in [to trading in Germany], so it’s too early for us to release numbers, but we have landed our own distribution infrastructure with the warehouses, IT systems and suppliers to build out our just-in-time distribution,” AO boss John Roberts told City A.M. “We’ve done all that in six months. We guided that it would cost between £5m and £10m, and its come in at the low end of that range.”

AO hasn’t put a date on its move into Belgium and the Netherlands, but is expected to look to France, Switzer­land, Austria and the Czech Republic as potential future markets.

Numis analyst Andrew Wade said: “We retain our ‘buy’ recommend­ation, continuing to believe that AO’s superior customer proposition underpins a huge growth opportunity, both in the UK and Europe.”

Yet AO’s shares closed largely flat yesterday and remained down 43 per cent since the group’s float in February.

On why the stock hasn’t fared well Roberts said: “Honestly I don’t know, our [initial public offering] was 11 times oversubscribed… I think it’s fair to say there’s been a shift in market sentiment over the past six months, but our major shareholders are still invested on our long-term journey.”

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