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Published on June 6th, 2017 | by The GC Team

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AO World shares down on warning of “significant slowdown” in UK growth

AO said its UK business would see a “significant” slowing in growth in Q1, as the “challenging” trading conditions experienced last year continued in the UK, citing a combination of factors including a post-Brexit weakness of consumer confidence, the slowdown in the housing market and continued inflation.

AO’s revenues for the year to 31 March were up 17% at £701.2 million, but full-year operating losses grew to £12 million from £10.7 million last year. The operating losses had their origins in Germany and the Netherlands, where investment in distribution infrastructure was “higher than anticipated.”

AO shares fell steeply by as much as 8% in early trading, but recovered to 139p (-4%) by midday. When floated on the Stock Exchange in 2014 the shares were priced at 285p.

One financial commentator highlighted the current difficulty of selling major domestic appliances and big consumer electronics, when consumers have so much choice about where to buy, without destroying margins with heavy discounting. AO is “growing sales impressively but finding it hard to turn a profit.”

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