AO World shares soar 11 per cent as cost cutting measure help raise profit guidance
Shares in AO World soared 11.33 per cent this morning as the electrical retailer revealed that it was raising its profit guidance for the fourth time since July thanks to a scheme of cost cutting measures.
The Bolton-based business told investors that estimated UK revenues for the full year are expected to be £1.13bn and adjusted EBITA will be in the upper end of £37.5m to £45m.
Shrugging off the inflationary pressures that are impacting most retailers, John Roberts, chief executive of AO World said that he anticipates that its “progress in improving both operational cost efficiencies and margin in FY23 will continue through the next 12 months and beyond”.
In November, AO World said that it would slash its spending on advertising and marketing, and cut down on overhead costs.
Moreover, the London-listed business said that its £80m revolving credit facility has been renewed with HSBC, NatWest, and Barclays, extending to April 2026.
“At the period end we expect to be holding a modest net funds position on a pre IFRS16 basis, reflecting an improvement of circa £20m from our interim position at September 2022,” AO World explained.
“The economy may be flatlining but AO World appears to be escaping the current gloom, upgrading its profit forecast for the third time this year, with founder John Roberts saying the tough conditions the company initially expected had failed to materialise, Julie Palmer, partner at Begbies Traynor, said.
She continued: “AO World was one of the big beneficiaries of lockdowns as stuck-at-home consumers splurged on new gadgets, and today’s update could signal that the business is in line for a similar boost.
“Recent research has indicated people are entertaining at home more as the cost of going out rises, and AO World may be riding the wave of people upgrading their kitchens and living rooms.”