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Delivery charges and control of advertising costs credited for AO’s return to profit


Online electricals retailer AO has raised its full year profit guidance, following a return to profit in its first half, citing the introduction of delivery charges on all deliveries; tight control of advertising and marketing budgets; and a reduction its warehouse costs for the turnaround.

In the six months to 30 September 2023, AO World posted a pre-tax profit of £13mn compared to a loss of £12mn a year earlier. It has therefore upgraded its profit guidance from £28mn to between £28mn and £33m for the year.

This came despite a 12% drop in revenue to £482mn, however the white goods retailer expects to return to revenue growth by the end of the year. AO reported attracting 290,000 new customers and recorded an increase in its repeat customer purchase percentage rate.

John Roberts, AO founder and chief executive, said: “I am very pleased with the clear progress that we are making as a result of our strategic pivot to focusing on profit and cash. We have generated more profit in the first half of this year than we did in the whole of last year, and are also upgrading our profit expectations for the remainder of FY24.

“As we anticipated, sales have reduced year on year as we continue to annualise the actions that we’ve taken to remove non-core channels and unprofitable sales from the business. However, we expect to end the year having returned to run rate revenue growth.

“We look forward with cautious optimism, given the macro challenges, as we turn our attention back to delivering profitable revenue growth to drive our operational gearing.”

Warehousing costs dropped to £25.5mn for the period, while other administrative costs decreased by £9.4mn to £56mn in the period.

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