AO World has reported UK sales up by 6.5% in the first three months of its financial year. At the same time, it said that it had taken a 10-year lease on a new German head office and distribution centre that can support both growth at AO.de and future websites serving neighbouring European countries.
The company showed in a trading update today that orders in the UK business rose by 13.9% in the three months to June 30, compared to the same time last year, while its flagship business AO.com, which sells white goods and electrical entertainment equipment, reported revenue growth of 11.2%, compared to last time.
The growth, it said, came at a “period of particularly intense competitive activity in the market, compounded by the uncertainty surrounding the general election.” But despite this it said it was seeing customer loyalty and customer satisfaction levels increase, something demonstrated in repeat business. It put that down to “unbeatable prices, huge range and availability, complemented by outstanding service.”
AO World said July had started well. “We are encouraged by the indications of growth in housing transactions and disposable income in the broader market,” said the trading statement, adding: “The business is operating efficiently and we continue to expect the business model to deliver as expected for the full year.”
The company said sales were building “satisfactorily” in Germany, where early customer feedback for AO.de showed buyers were “delighted” with the proposition. In response, AO has launched a national TV advertising campaign and has taken a 10-year lease on a new 35,000sq m European distribution centre and head office in Bergheim, near Cologne to underpin both growth in Germany and future expansion into neighbouring countries.
Commenting on the figures, Hannah Maundrell editor-in-chief of money.co.uk, said: “This is yet more proof that we’re shunning the shops and looking online when we want to make a big purchase. Consumers have cottoned onto the fact that they can often get more choice, better information and the benefit of reading owner-reviews when they order online; not to mention stronger consumer rights and more of a chance to shop around. There’s no doubt that high-street retailers are having to work far harder to fight for custom.
“Households have a little more cash in their pockets at the moment thanks to low inflation but with the prospect of a Bank of England rate rise on the horizon it will be interesting to see whether AO World’s success lasts the year.”
Ken Odeluga, senior market analyst at Cityindex.co.uk, said: “My view remains that as the ambitious European expansion is bedded down, little to no organic profit growth is likely for the next three-to-five years.
“On the other hand, at least AO has remained on track with its own expectations over the last five months. This is quite surprising considering their online presence however it could be down to the dominance of the likes of Amazon and eBay.”
