Online electricals retailer AO World has reported a pre-tax loss of £13.5 million – nearly double what it was the previous year.
The Bolton-based group saw underlying losses widened to £3.4 million from £2.1 million the previous year.
In a trading report for the 12 months to March 31 the company said its UK arm recorded a drop in underlying earnings to £22.6m from £24.4 million the year before due to higher marketing costs and a “consistently competitive pricing environment”.
However, revenue grew in both the UK and Europe with total for the period increasing by 13.6 per cent to £796.8m.
AO website sales for the UK up 8.7 per cent to £606.6m.
Total UK revenue was up 8.1 per cent to £680.8m.
Steve Caunce, CEO, said: “FY18 has been another year of good progress for AO.
“Over the year we have continued to evolve our purpose to ensure it is suitable for the AO of today: to have the happiest customers by relentlessly striving for a better way.
“Our consistently high NPS scores and our amazing Trustpilot achievement in the UK proves we are firmly on track.
“We have continued to successfully launch new categories across our territories, and our UK recycling facility became fully operational, building upon our vertically integrated infrastructure.
“In the UK we have maintained market share in our core UK MDA business in a very competitive market and have performed well in the second half of the year with limited marketing expenditure demonstrating the asset of our customer base as it repeats and recommends AO.
“Our European operations continue to build scale and confidence as we remain on track to achieve our FY21 profitable run-rate objective.
“I want to thank all our AOers for their hard work and dedication this year. There has been fantastic collaboration across our business as we have come together to define what we really stand for.
“The new financial year has started well in both the UK and Europe, with UK revenue growth returning to double-digit levels against prior year. Whilst we remain cautious on outlook given economic and competitive pressures on the UK electricals market we are confident of achieving our stated goals of future growth in the years ahead.”
Commenting on the figures, Russ Mould, investment director at AJ Bell, said: “Investors are clearly willing to focus on AO World’s double-digit sales growth achieved in the year to 31 March judging by how the share price is rising today. However, if that’s the headline good news, there are plenty of negative issues behind it.
“The company is still unable to derive a profit despite the increase in sales. Losses widened year-on-year due to investment in European expansion and weak pricing in the UK.
“The spend in Europe is another reminder that just because a retailer operates online it does mean it is spared any costs of doing business.
“Management are also cautious on the outlook amid strong competition and economic uncertainty.”
— With assistance by Stuart Greer