AO World share price falls despite being on track for revenue jump

Kasmira Jefford
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Investors haven't warmed to AO World (Source: Getty)

Shares in AO World have fallen 3.9 per cent despite the online electricals giant saying it is on track to report a 20 to 21 per cent jump in second quarter sales.

Speaking at a Capital Markets Day being held at its Bolton headquarters today, chief financial officer Mark Higgins said sales are expected to have grown by 30 per cent year-on-year after ploughing further investment into TV advertising and media campaigns to boost awareness of the brand.

AO World, which rivals Dixons Carphone and Home Retail's Argos, selling everything from washing machines and fridges to vacuum cleaners and TVs, wowed the London Stock Exchange when it floated at 285p per share in February last year, giving it a market cap of £1.2bn despite profits of just £8.7m.

When it issued a profits warning in February of this year, AO World's share price tumbled by 30 per cent in one day, with its shares now down by around 55 per cent since it listed.

Read more: AO World revenues rise 38 per cent on Black Friday

Chief executive and founder John Roberts admitted at the time that some of its earlier revenue growth may have been the result of extra hype surrounding the float of the company. He also blamed the loss of a logistics contract and the effects of the Black Friday discount day last November.

But now the business appears to be getting back on track with its long-term plans, including its expansion into Germany. AO World launched its website in Germany last November, with plans to eventually expand into other European countries.

Higgins said: “Progress in Germany remains in line with plan and AO World continues to be encouraged by the development of the business. Following an initial television advertising campaign in Germany during July, the company has invested in further campaigns in August and September and expects to incorporate such campaigns into its operating model going forward.”

It will publish its results for the first half of the year on 24 November.

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