Losses at white goods etailer AO World (AO.) did deepen, but this only tells half the story. Management is investing heavily in marketing in a bid to increase its market share - which chief executive John Roberts says is working in all the categories and geographies it operates - and it's also ploughing cash into bolstering its infrastructure in Europe. So, while the group's operating losses extended to £10.6m from £2.2m last year, as previously guided, Mr Roberts was able to upgrade cash profits forecasts in the dominant UK division for the 2017 financial year.
An important development will be the group's move into computers later this year. Mr Roberts said he had been investigating the opportunity for roughly nine months and had decided to "sprinkle the AO pixie dust" on the category - which means making it easier for consumers to know which laptop best suits their needs. The chief executive is also confident that the growing trend of consumers buying online would benefit his business in the long term.
Analysts at Numis also upgraded their performance expectations and now expect a group pre-tax loss of £6.3m for FY2017, leading to negative EPS of 1.2p, compared with losses of £8.4m and 1.6p in FY2016.
| AO WORLD (AO.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 167p | MARKET VALUE: | £703m | |
| TOUCH: | 164-167p | 12-MONTH HIGH: | 198p | LOW: 119p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 11.5p* | NET CASH: | £25.4m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 209 | -1.7 | na | na |
| 2013 | 275 | 8.2 | 1.6 | na |
| 2014 | 385 | -7.6 | -2.4 | nil |
| 2015 | 477 | -2.9 | -0.6 | nil |
| 2016 | 599 | -6.7 | -1.4 | nil |
| % change | +26 | - | - | - |
Ex-div: na Payment: na *Includes intangible assets of £15.6m, or 3.7p a share | ||||
