British home electricals retailer AO shares slide as it gears up for Brexit
UK online electronics retailer AO World has scraped back some of its losses in the first six months of this year, targeting European profitability despite market challenges.
The company's share price tumbled almost 15 per cent in early trading this morning.
The figures
Overall revenue across the UK and Europe rose almost 10 per cent to £404.2m, up from £368m in the same period a year ago despite a tough trading environment and a decline in the UK appliances market.
The group's adjusted losses after interest and tax fell to £5.4m, down 16.7 per cent from £6.3m in 2017. Already profitable in the UK, AO is aiming to be turn a profit in Europe by 2021.
Full year results are expected to fall within the company's guidance range of a loss of between £1m and £5m, however it will be more heavily weighted towards the second half of the year than previously anticipated.
Why it's interesting
While the company managed to narrow some of its losses over the period, a challenging market has provided some pushback to AO's ability to push for growth across all of its regions.
Additionally, AO said it will increase its stockpile of products up from its current preparation of 35 days in the short to medium term, as it looks protect itself from any supply chain friction caused by Brexit.
Given the company's weighting on the second half of the year, analysts at Shore Capital Markets said it "remains all to play for". It also noted that the troubles AO has faced in the appliances market could worsen, as Brits turn away from buying big-ticket items amid Brexit uncertainty.
What the company said
AO chief executive Steve Caunce said:
"This has been a half of continued delivery against our long-term strategy, thanks to a strong offer for customers.
"While our core UK and Germany [appliance] markets have been challenging, with the UK market becoming tougher than expected, we take encouragement that we are at least maintaining market share in this core category in the UK and growing significantly in Germany.
"Elsewhere, our continued focus on growing our range of online electricals and adding new complementary ranges proved successful in the first six months of the year, with newer categories such as Audio Visual and Computing performing particularly well."