AO World confirms one credit issuer has cut suppliers' cover

Responding to weekend press speculation, AO said: "This was a reduction from the heightened levels that had been in place and required through the period of the pandemic. To date this rebased cover has had no effect on AO's liquidity position which remains in-line with the board’s expectations for FY23."

AO said its current financial performance and financial position remain in line with the board’s expectations and the guidance outlined in the trading update on 29 April.

The company, which announced last month that it had decided to close its German operations, said progress to date has been encouraging, with total cash costs of closure now expected to be towards the lower end of original estimates of nil to £15m.

The higher end of that range assumes AO would be unable to exit certain asset leases, of which around £10m of cash outflow would be due in future years.

AO said it continues to have full access to its £80m revolving credit facility, the term of which runs until April 2024.

"In addition, the company continues to consider and implement a number of ongoing initiatives and further actions to strengthen its balance sheet while optimising its focus on profit and cash generation against the uncertain macroeconomic conditions in the UK and the continuing global supply chain challenges."

At 1450 BST, the shares were down 13% at 58.97p.

Credit insurance protects suppliers from the risk of customers going bust between the acceptance of an order and payment being made.