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AO reports sharp rise in sales and profits in ‘step change year’

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AO served customers at a new level of demand throughout the pandemic. Image courtesy of AO World
AO served customers at a new level of demand throughout the pandemic. Image courtesy of AO World
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AO World reports sharp rise in sales and profits in ‘step change year’

AO today reported sharp rises in sales and profits in a year in which shopping moved online fast during the Covid-19 pandemic.

 

AO founder and chief executive John Roberts said it had been a “step change year” for AO in which it had risen to the challenge for its customers. An extra 1.9m people visited its website during the year, with traffic up by 83% following TV and social media campaigns and sports sponsorships. By the end of the year, its UK business boasted a 23% share of the medium-sized domestic appliances market and a 5% share of the small domestic appliance market.


The Bolton-based retailer today reported group revenue of £1.7bn in the year to March 31. That’s 62% up on the previous year. UK sales of £1.4bn were 59% ahead, while German sales of £226m were 81% up on last time. Pre-tax profits of £20m were 1,900% ahead of the previous year – when it reported pre-tax profits of £1m.

 

AO chief executive John Robert says: “Delivering brilliantly for customers is at the heart of our mission to become the global destination for electricals. We firmly believe that once people experience a better way to buy electricals, they are unlikely to return to old ways of shopping. Our vertically integrated business model offers substantial operational leverage which means all incremental growth feeds our flywheel, generating cash to invest back into our business for customers.

 

"Coming out of the pandemic, the direction of travel is firmly with AO, and our proven ability to build scale and drive growth gives us confidence to look towards further European expansion over the next five years. We’ll continue to make choices that create long-term value for our share owners, as well as make our mums proud.”

 

The company believes that the shift to online retail is continuing but that the next 18 months will remain difficult.

 

Roberts adds: “Whilst we inevitably benefited from the shift to online shopping and the change in customer lifestyles, AOers have had to work hard under challenging conditions to satisfy a significant increase in demand and maintain the outstandingly high levels of customer service for which AO is known.”

 

Planned investment

During the year the retailer added warehousing and delivery capacity to help it manage the fast growth in demand, almost doubling its warehouse capacity to 1.8m sq ft and creating 1,200 new jobs across the business, in areas from customer service to distribution.

 

Looking ahead, the retailer now plans to invest in the customer experience, including £30m in marketing and digital content, £30m in its support systems and says it may put £20m into a second recycling facility in the next 18 months. Over the last year, its revenue from recycling grew by 32% despite recycling centres being closed for long periods of time, as it picked up old machines from AO customers and from local authority clients and, in total, recycled more than 1.3m appliances. Its new plastics recycling centre became fully operational during the year and it is has now made its first sales of recycled plastics. The AO Business division, which sells to house builders and housing associations, among others, grew by 69% over the year. It also trialled a store within a store at branches of Tesco in order to reach customers in new ways and to raise its brand recognition. However, that concept could only serve customers for a limited amount of time during a year of lockdowns.

 

AO is a Top100 retailer in RXUK Top500 research.

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