AO World share price crushed as retailer misses expectations with £2.2m annual loss

 
Joe Hall
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AO World has struggled to match an impressive IPO with strong results (Source: Getty)

The figures

Online retailer AO World missed expectations in its first full year as a listed company, sending its share price down by more than six per cent.

The online home appliance retailer delivered an annual loss of £2.2m, despite growing revenue by 23.8 per cent to £476.7m, from £384.9m last year.

Read more: AO World chairman sells £10m stake

UK sales rose 32.9 per cent to £381.5m from £287.1m last year, with total revenue up 22.3 per cent to £470.8m.

AO World's share price took a battering in February after broker Panmure Gordon set a "sell" rating on its stock and said shares in the retailer were overvalued.

Investment in Europe start-up operations (including German website AO.de), which totalled £4.2m, was the biggest contributing factor behind the annual loss. Deducting the European operating loss of £8.2m, the group's adjusted operating profit stands at £4.5m.

Investors were left with a loss per share of 0.60p.

Why it's interesting

AO World wowed the London Stock Exchange when it floated at 285p per share last February, giving it a market cap of £1.2bn despite profits of just £8.7m.

The online retailer has since failed to live up to its debut, with shares falling more than 40 per cent since it listed. Unsurprisingly, the drop has continued this morning as investors follow the example of the group's own non-executive chairman Richard Rose who sold his entire £10m stake in the company in March.

What AO World said

Chief executive John Roberts said:

I am very pleased with the achievements we have made over the year, particularly in Germany and with the successful introduction of the AV category to AO.com Our long-term plan is on track and despite missing our financial expectations for the year, we have continued to take market share in the UK MDA market delivering significant growth in UK sales and adjusted EBITDA.

In short

Sales are growing, but the online retailer's European expansion means the company is yet to give investors a pay-off. The frenzy for shares in AO World following its IPO looks long gone.

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