AO World surges on strong Q1 growth

Shares in AO World surged on Thursday as the online white goods retailer reported strong growth in first-quarter revenues.

In a trading statement for 1 April to 30 June ahead of its annual general meeting, the company said AO branded sales in the UK were up 29% on the year, with total UK revenue growth of 25%, driven mostly by improving brand recognition.

Revenue in euros, meanwhile, rose by 101% and AO said it had made further advances in gross margin with expected efficiencies coming through in the cost base.

"The business remains on track with its long-term strategic plan. Customer satisfaction continues to be exceptional in all of our territories, and development of the UK computing and German audio-visual categories progresses as we look forward to launching them for our customers later this year.

“Our brand awareness continues to grow, underpinned by our unique culture, values and proposition.”

The company said it expects operations in the Netherlands to be fully up and running by the end of its second quarter and looks forward to accelerating growth over the second half of the year as a result.

AO said it was mindful of economic uncertainty in the wake of the UK’s vote to leave the European Union and its potential effect on consumer confidence and foreign exchange exposure of its suppliers. Nevertheless, its expectations for the UK business remain unchanged over the financial year.

Numis, which rates the stock at ‘buy’, said: “IAO is firmly back on the front foot in the UK, taking significant market share and driving efficiencies, and we remain confident that the factors weighing on European contribution (product margin and drop densities) will come in time.

“We retain our positive stance, confident that AO’s leading customer proposition can support long term profitable growth in the UK and internationally.”

At 0940 BST, shares were up 9.5% to 147.15p.