AO World records a 53.6% jump in annual core earnings as COVID-19 fuels online shopping
- AO World records a 53.6% jump in annual core earnings as COVID-19 fuels online shopping.
- The British online-only electricals retailer prints a 15.9% increase in its full-year revenue.
- The Bolton-based company permanently closed its loss-making business in the Netherlands.
AO World (LON: AO) said on Tuesday that its annual core earnings came in 53.6% higher as the Coronavirus lockdown fuelled a trend of online shopping in recent months. The company also said that the jump in digital sales had sustained in June even after the government eased COVID-19 restrictions and enabled businesses to reopen for the public. Furniture retailer, DFS, also said on Tuesday that the ongoing health crisis weighed on its annual sales.
Shares of the company jumped 7% on market open on Tuesday but tanked more than 10% later on. At 154 pence per share, AO World is currently 80% up year to date in the stock market after recovering from a low of 50 pence per share in March. Learn more about a stock index.
AO World prints a 15.9% increase in revenue
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At £19.6 million, the British online electricals retailer’s adjusted core earnings came in significantly higher than £12.8 million in the previous year. The company attributed the increase primarily to the robust performance of its UK business. AO World signed for a distribution unit of 115,000 square feet last week.
In terms of pre-tax profit, the Bolton headquartered company reported £1.5 million. In the previous year, it had swung to a £20.2 million loss. AO World also printed a 15.9% increase in its revenue on Tuesday to £1.05 billion.
The British company specialises in mobile phones, televisions, cookers, fridges, and washing machines etc. Owing to the operational changes attributed to the Coronavirus lockdown, AO World said, staff-related costs have surged in recent months.
The company also acknowledged that the ongoing health crisis had weighed heavily on consumer confidence as the global economy entered a recession that is likely to translate into lower demand for its big-ticket items in the upcoming months.
AO World closed its business in the Netherlands
So far, however, it expressed confidence that sales were robust with a particularly higher demand for Nintendo Switch video consoles, bread makers, and printers. AO World permanently closed its business in the Netherlands earlier this year in March. The growth in revenue and profit, it highlighted on Tuesday, was encouraging in Germany.
According to CEO John Roberts of AO World:
“COVID-19 has accelerated a shift in customer behaviour towards online shopping, and we now need to cement that change. In short, we must drive forward, so those customers never look back.”
Formerly known as Appliances Online, the British electricals retailer is currently valued at £736.26 million.