AO World shares lose their power after £2.2m loss
AO World’s shares were dealt a further blow yesterday, after the online electricals retailer revealed a £2.2m loss for its first year as a listed company.
The Bolton-based company’s shares have fallen by 70 per cent since its £1.2bn market debut 15 months ago, when it was valued at almost 72 times its projected earnings.
AO World issued a profit warning in February, a year after it floated, blaming publicity around its IPO for artifically inflating sales and heavy discounting during Black Friday week.
This was followed by news that its chairman Richard Rose had sold 90 per cent of his stock and that a crucial logistics contract had been lost.
AO World said UK-adjusted core earnings for the year to 31 March rose 47 per cent to £16.5m, as group revenue rose almost a quarter, to £477m, in line with its lowered guidance.
The group, which sells everything from washing machines to vacuum cleaners and ovens, said that after launching its business in Germany last year, £4.2m of start-up costs had dragged it into a £2.2m operating loss.
Canaccord Genuity analysts said that bigger-than-expected costs of launching in Europe were an “unwelcome development”. John Roberts, AO World’s chief executive, said he was “encouraged” by the progress and that the company would step up expansion into new market, including the Netherlands and France next year.
“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 [major domestic appliances] market.