AO World to review German operations amid rising costs and falling revenues

AO World stated its German business was being "significantly impacted" by a number of recent material changes to the local trading environment, with competition in the online market intensifying as online penetration returns to pre-pandemic levels, digital marketing costs substantially increasing against pre-pandemic levels and ongoing constraints in supply.

Given that AO World expects these trends to continue for the foreseeable future in the German market, it decided to commence a strategic review of its German business, which will evaluate a range of options aimed at maximising shareholder value.

German revenues were down 24% year-on-year in the quarter and 8% year-to-date, while UK revenues were 12% weaker on the quarter and 1% lower in the nine months ended 31 December. Group third-quarter revenues were 14% softer and 3% lower year-to-date.

"We remain confident about AO's long-term growth prospects, driven by the strength of our proven business model, the quality of our customer proposition, and the long-term market trend towards online migration," said the firm.

As of 0945 GMT, AO World shares were down 2.71% at 104.0p.