AO World increases profit outlook for fourth time after cutting costs

AO World has lifted its profit outlook again as it continued to benefit from recent cost-cutting efforts.

The online white goods retailer saw shares lift by more than a tenth in early trading after the fourth upgrade since last summer.

However, the recent improvements in outlook followed a sharp slump in its share price from the start of 2021 as pandemic-boosted growth slowed down.

On Friday, AO said it has now witnessed “positive traction” from initiatives to reduce costs and improve margins which it launched last year to drive its turnaround.

The retailer added that worries over a negative effect from continued global economic uncertainty and the tough consumer backdrop “have not materialised to the extent envisaged”.

As a result, the group now expects to reach the top end of previous profit guidance, while revenues are due to have hit £1.13 billion for the year to March.

John Roberts, chief executive officer and founder, said: “We are encouraged by the work undertaken to pivot the business during the financial year 2023.

“AO enters the new financial year with net funds on the balance sheet, a robust trajectory, and full confidence in our ability to deliver on our medium-term profit guidance of 5% adjusted EBITDA (earnings before interest tax, depreciation and amortisation).

“We anticipate that our progress in improving both operational cost efficiencies and margin in full-year 2023 will continue through the next 12 months and beyond.”

The group’s shares were up 11.4% at 75.4p on Friday morning.