AO World suffers losses as it pushes on with European expansion

 
Helen Cahill
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Source: AO World

AO World's share price fell in morning trading after the retailer said its earnings will be in the lower end of market expections.

The figures

For the six months ended 30 September, total revenue was up 13.3 per cent from £324.7m to £368.0m. Website sales were up 9.9 per cent to £282.5m, as compared to £257.0m for the same period the year before.

Total UK revenue climbed 7.4 per cent to £316.8m, with European revenue soaring 60.5 per cent to €58.1m (2016: €36.2m).

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However, earnings before interest, tax, depreciation and amortisation (Ebitda) swung to a loss of £6.3m. In the same six months last year, AO World made a profit of £1.5m.

At time of writing, AO World's share price was down 2.17 per cent to 112.5p.

Why it's interesting

The online retailer said its losses stemmed from its European expansion. The European business registered an Ebitda loss of €15.6m, building on a €14.3m loss in the prior year. By contrast, UK Ebitda came in at a profit of £7.4m.

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The firm's chief executive said today that full-year earnings will be at the lower end of market expectations, which he said was due to challenging market conditions and currency movements.

What AO World said

Steve Caunce, chief executive of AO World, said: "We are broadly on track with our plans for the year as a whole – with the positive impact of improving sales growth through the first half of the year combined with the first half biased phasing of our marketing spend – in spite of the challenging UK market conditions."

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