AO World is slower at home

Chief executive Steve Caunce admitted that trading on home soil became more difficult during the second half of the financial year, as consumer confidence started to weaken, the UK housing market began to slow and price inflation took hold. This latter issue has proved a real headache for many British retailers this year, and resulted in margin pressure during the second half for AO World. This had a dampening effect on UK profit growth which, in turn, meant that the group missed its internal adjusted cash profit target. Overall, adjusted group losses came in at £2.1m (£3.9m loss in FY2016).

Although managers say AO has entered a period of consolidation in Europe, it's still taking a lot of investment to build the business there. The group recently staged a £50m fundraising to help strengthen its balance sheet, and managed to spend roughly a third of revenues on selling, general and administrative expenses on the continent. Within that, it spent around £6m on European marketing, the same as last year, while warehousing costs rose by £1.8m and other administration expenses rose by 60 per cent to £13.6m - largely the result of growing staff numbers.

Analysts at Numis expect losses of £7.7m for the year ending March 2018, equivalent to a loss per share of 1.7p, compared with losses of £12.6m and 2.9p in FY2017.