AO World says that being “brave and bold” decisions to invest in capacity and infrastructure early in the Covid-19 pandemic helped it to grow sales by more than 60% in its latest financial year. It now expects customers to to continue to buy electricals online in the long-term.
The retailer, whose electricals site ao.com is ranked Top100 in RXUK Top500 research, says in a full-year trading update that group sales grew by 62% to £1.7bn in the year to March 31. Sales on its UK website, ao.com, were 88% up on last time in the final quarter of the year – when most of the UK was in lockdown 3.0. Its German business, ao.de, reports full-year sales 77% ahead - and is expected to become profitable in the current financial year.
Top-line pre-tax profits before one off costs are expected to be in the range of £63m to £72m - up from £19.6m a year earlier. However there is expected to be a £15m write down in income from customer warranties after a rise in warranty plan cancellations, related to the period from 2008 to 2020. More details are to come with full-year results in June. AO says that any government support it claimed has now been repaid and did not affect profitability. It currently has liquidity of £142.6m, with £57m net in cash.
During the year the retailer added more than 2m new customers, while customer satisfaction, as measured by the net promoter score, came in at more than 80. The company has added warehousing and staff as it expanded its capacity.
AO founder and chief executive John Roberts says: “The last 12 months have been like no other and we have been very proud to rise to the challenges for our customers - keeping their lives powering on with essential electrical and technology products. Serving customers in The AO Way and treating every customer like our own gran, irrespective of cost, has enabled us to impress millions of customers with a better way to shop electricals.
"We were brave and bold in our capacity and infrastructure investments early in the year and now look forward to building on that scale advantage.
"I believe that these market dynamics will stick and, whilst there is inevitable uncertainty, the direction of travel is firmly with AO and the business model we have spent more than 20 years building. I expect that we will continue to be a double-digit growth business in in the year ahead, even now as we lap the tough comparatives from last year with physical stores open. I look forward to providing more detail at our full year results in June.”