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Finance

Published on February 25th, 2015 | by The GC Team

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AO shares fall on profits warning

Shares in AO World plc dipped by almost a third this morning as the company issued a warning that profits for the financial year ending 31 March 2015 will be below expectations.

AO World floated in February 2014 with a market value of £1.2 billion, which some analysts likened to the dot-com bubble created by technology companies in the early 2000s.

The company today said “it is now apparent that some of the revenue growth in the second half of FY14 and going into FY15 was due to the extra publicity surrounding the company at that time.  This impacted the year-on-year growth rate.”

AO has found achieving expected sales growth to date in Q4 FY15 “difficult” and this has negatively affected adjusted EBITDA, it said.

At the time of its Q3 trading statement, AO expected to meet the market’s expectations for both revenue and adjusted EBITDA in the UK, even taking into account the loss of a logistics contract, the cost impact of driver legislation changes and the adverse effects of Black Friday, which did not produce incremental sales, but condensed sales into a shorter time period.

The company said it now expects revenue and adjusted EBITDA for its UK operations to be c.£470m-£475m and c.£16.5m respectively.

John Roberts, Chief Executive Officer, said: “AO has experienced tougher than expected trading conditions in the final quarter of the year, as compared to Q4 in FY2014. While we are disappointed that sales and profits are going to come in slightly below expectations, we remain committed to our market-leading, customer-focused business model.

“We continue to redefine retailing in our chosen categories with unbeatable prices, huge range and availability, complemented by amazing service. Having delivered on all our strategic objectives through this financial year, we are confident of our ability to continue to deliver for our customers and to further drive the success of AO in the interest of all stakeholders.”

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