Only a week on from Dixons Carphone’s profit warning, all eyes are on full-year figures from online electricals retailer AO World (AO.). Surely, if Dixons is failing to shift products in store, then heading online must be the answer?
If only it were that simple. Operating losses are widening at AO as rapid expansion proves to be an expensive strategy. Added to this are “challenging” market conditions, with analysts at Numis describing the competition as “aggressive”. To keep up with rivals, AO World has been forced to keep prices competitive, while higher marketing costs weighed on the level of cash profits generated on home turf through FY2018. However, returns on this basis were slightly better across Europe, as reduced promotional activity supported margins.
Analysts at Numis expect losses of £8.8m for the year ending March 2019, giving a loss of 1.9p a share, compared with losses of £15.5m and 3.4p a share in FY2018.
| AO WORLD (AO.) | ||||
| ORD PRICE: | 160p | MARKET VALUE: | £734m | |
| TOUCH: | 159.8-160p | 12-MONTH HIGH: | 180p | LOW: 98p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 18p | NET CASH: | £38.3m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 385 | -7.6 | -2.4 | nil |
| 2015 | 477 | -2.9 | -0.6 | nil |
| 2016 | 599 | -6.7 | -1.4 | nil |
| 2017 | 701 | -7.0 | -1.6 | nil |
| 2018 | 797 | -13.5 | -2.9 | nil |
| % change | +14 | - | - | - |
| Ex-div: | na | |||
| Payment: | na |
