IRUK 500

AO World says its plans are on track despite pre-tax losses

AO World today said it remained on track to be the best electrical retailer in Europe, as it reported growing sales alongside pre-tax losses in the first half of its financial year.

The retailer, whose UK website AO.com is a leading retailer in IRUK Top500 research, reported total revenue of £368m in the six months to September 30, 13.3% up on the same time last year. UK website sales grew by 9.9% to £282.5m, including second quarter growth of 13.2% after first quarter growth of 6.2%. Total UK revenues came in at £316.8m, up by 7.4% on last time.

Its European business saw revenues grow by 60.5% to €58.1m (£51.2m). Operating losses of £12m widened by 78% from losses of £2.8m a year ago. The UK operation saw profits fall to £2.5m from £9.4m last time, and the European operation’s losses widened to £14.5m from £12.2m last time. At the bottom line, adjusted earnings before interest, tax and asset writedowns came in at losses of £6.3m, with profits of £7.4m in the uK and losses of £13.7 in its European operations.

Chief executive Steve Caunce said the retailer had made a good start to the year, with steady progress against a four ‘C’s strategy focused on customer, countries, categories and culture. It said its European operations were also performing in line with its plans.

“As AO continues to become the destination for consumer electronics for more and more people, we will continue to evolve our brand strategy, underpinned by our commitment to make things easy for our customers because we simply care more,” he said. “While we are mindful of macro-economic factors we remain confident that we are on track with our plans to be the best electrical retailer in Europe.”

Here’s what the retailer said about its multichannel strategy.

Europe

AO World operates websites in Germany and the Netherlands, and has recently launched a regional 35,000 sq m distribution centre in Bergheim, Germany, which now serves both of those markets. Sales in these markets have grown with, says AO World, little investment in traditional marketing; instead awareness has come through customer recommendations. It is also reaching new customers through third-party sites including Amazon in Germany and Blokker in The Netherlands.

The customer

The retailer says its customer satisfaction is “exceptional” in all its territories, with a Net Promoter Score of about 80, while repeat purchase metrics “performed well” across territories. It says it has made improvements to the customer proposition over the half-year inspired by a “care-more” culture and a focus on putting the customer first. “Those customers that use us again and again do so because we make the experience a great one, from the website, to the products, to the people – we just make it an easy choice to pick AO.

“Every week thousands of new customers are discovering who we are and what it means to shop with us, and we continue to evolve the customer journey, adding more features and providing easier ways to shop and get the most from our products and services.”

Logistics

The Bolton-based retailer added a new outbase in Bridgend in order to help improve delivery availability and services in the South West. The base is one of 14 that the retailer now operates in order to ensure that stock is close to customers in order to speed delivery options. That’s up from four in 2012.

In the UK it has also added a second drop-ship vendor to its infrastructure, enabling it to add more categories to ao.com including gaming, mobile, smart home devices and photography.

Mobile shopping

The pureplay’s transactional mobile app has now been launched across all its territories, after going live in the UK in June.

Image: AO.com founder John Roberts pictured at the time of the company’s flotation on the UK stockmarket.

Image credits:
  • © Mark Waugh / markwaugh.net

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