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AO swings to profit thanks to reduced costs and job cuts

AO World

AO has returned to profit on reduced costs and better margins, as the company reported a 17% drop in revenues in its latest annual results.

For the year ended March 2023, the electrical retailer reported a pre-tax profit of £7.6 million, compared to a loss of £10.5 million in the same period last year.

However, its revenue slumped 17% to £1.4 million over the year amid the ongoing cost-of-living crisis.

During this period, the company, which is ranked Top500 in RXUK Top500 research, also completed a “major staffing restructure”, which saw a “significant reduction in headcount”, as well as announcing the closure of three of its offices.

“The significant improvement in our profit performance speaks for itself and has been achieved by focusing on our core strengths and simplifying our operations, while still delivering the outstanding customer service for which we’re famous,” AO founder and CEO John Roberts said.

“Looking ahead, we intend to continue with this focus whilst also retaining the flexibility to drive growth through disciplined investment at the right pace and at the right time.”

On its outlook, the company claimed it is “confident” in its ability to deliver on its 5% EBITDA ambition in the short term and “return to top-line growth in the medium term”.

It added: “Our strategy now is to invest prudently in the business, seize the significant market opportunities that we see in front of us, leveraging our growing and loyal customer base.”

The news comes as Mike Ashley’s Frasers Group recently acquired a 19% stake in the company, in a deal worth £75 million, days after the retailer launched a recruitment drive to hire over 250 people to grow its team of customer service specialists.

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AO is ranked as a Top100 retailer in the 2023 RXUK UK Top500, which highlights how the leaders in this market are proving flexible and adaptable in response to the ongoing Covid-19 pandemic, cost-of-living crisis and rising energy costs.

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