AO World delivered profits before tax of £13m in the six months to September 2023 compared to a loss of £12m in the same period last year.Sales declined by 12% YoY in the period to £482m as the business reduced activity in unprofitable sectors. John Roberts, CEO, “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. As a result, we are upgrading our profit before tax guidance for FY24 to between £28-33m”.Financial Highlights• Statutory profit before tax of £13m (HY23: £(12)m)• Gross margin has improved to 23.5% (HY23: 19.5%)• Warehousing costs have fallen to £25.5m (HY23: £31.3m) or to 5.3% of sales (HY23: 5.7%).• Adjusted EBITDA of £27m (HY23: £9m), achieving an adjusted EBITDA margin of 5.6% (HY23: 1.6%)
Outlook
- Previous FY24 guidance in July was for Profit Before Tax around £28m
- New PBT guidance between £28m and £33m for the full year
- Forecast FY24 revenue to be around -10% YOY
Longer-term
- AO view their addressable market in the UK is significant as it currently stands at c£27.6bn
- AO aim to deepen their presence in categories such as televisions, laptops, audio visual and small domestic appliances ("SDA"). The online segment of the market in those categories remains a key opportunity for us as the long-term structural migration to online retailing continues
AO's Founder and Chief Executive, John Roberts, 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 ever, I'm grateful to our manufacturer partners for their continued support and of course to the fantastic AO team who continue to be magical in the moments that matter for customers while maintaining the discipline and focus needed to deliver our plan."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."
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