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AO World warns on profits after ‘adverse effects’ of Black Friday

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The Black Friday phenomenon did not result in extra sales, but instead meant that transactions took place over a shorter period of time, said AO World today as it warned full-year profits would be lower than expected.

The company, which operates pureplay domestic appliances retailer, said in a trading statement that factors including the loss of a logistics contract, the cost of driver legislation changes and “the adverse effects of Black Friday” meant it now expected to turn over between £470m and £475m in the full year to March 31 2015, with forecast profits of £16.5m “slightly below” market expectations.

Black Friday, it said, “did not produce incremental sales, but condensed sales into a shorter time period.”

Added to these factors, the company said that it had found reaching its fourth quarter sales targets “difficult”. “It is now apparent,” it said, “that some of the revenue growth in the second half of full year 2014 and going into full year 2015 was due to the extra publicity surrounding the company at that time.”

The company’s share price closed a third down, at 192p, by the end of trading today – down from yesterday’s close of 281p.

However, AO World said it was confident in the “fundamental business model” and that trading in Germany was “advancing well” while other territories are now being assessed for further expansion. In the UK, said the company, the move to sell audio visual equipment is “developing well”.

Chief executive John Roberts said: “AO has experienced tougher than expected trading conditions in the final quarter of the year, as compared to quarter four in full year 2014.

“While we are disappointed that sales and profits are going to come in slightly below expectations, we remain committed to our market-leading, customer-focused business mode.

“We continue to redefine retailing in our chosen categories with unbeatable prices, huge range and availability, complemented by amazing service.

“Having delivered on all of our strategic objectives through this financial year, we are confident of our ability to continue to deliver for our customers and to further drive the success of AO in the interest of all stakeholders.”

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