AO World shares surge on UK revenue growth

Shares in AO World surged following a pre-AGM update when the company said its first quarter growth would be ‘muted'.

Shares in the appliance maker were up 8.35% to 129.70p at 0840 BST.

AO World said its main UK business reported revenue for the quarter ended 30 June was up 6.5% with orders up 13.9%.

The company said its website experienced revenue growth of 11.2% year on year, but was not clear about its German revenues.

The appliance firm said it had a strong start to trading in July and was encouraged by an increase in housing transactions and disposable income.

“We are mindful of recent volatility and intense competitive activity in the market, however, our customer loyalty continues to increase and we see this coming through in repeat business,” the company said in an update.

AO World said it was on track to deliver as expected for the full year.

Numis retained a ‘buy’ rating on the stock and a price target of 250p, and said the update was better than expected.

Analyst Andrew Wade said intense competition was led by Currys, which could continue to disrupt the market.

Retail analyst Nick Bubb said while AO World seemed to have avoided a profit warning its statement “we continue to expect the business model to deliver as expected for the full year” was not completely clear.

Bubb said a rally in the share price was expected.