Fridge seller catches cold
AO shares hit as house sales fall
THE firm behind fridge freezer website AO.com has caught a chill from the cooling housing market.
Shares in electrical appliance seller AO World slumped 10% yesterday after bosses braced investors for a “significant” slowdown in sales.
The Britain’s Got Talent sponsor said trade in the six months to April was hit by a triple whammy of the Brexit vote denting consumer confidence, the falling pound pushing up prices and a slowdown in the housing market.
The last of those hit AO hard as it has traditionally relied on people buying new washing machines, fridges and other white goods when they move home.
Recent Bank of England figures showed mortgage lending dropped to a 12-month low in April. AO chief executive Steve Caunce admitted: “That market is having a tough time.”
Group sales still rose 17% to £701million in the year to April, with takings in the UK up 14.5% to £558m.
But a big push to expand into Germany and the Netherlands saw full-year losses widen from £10.6m to £12m.
European losses of £27.6m offset a £15.6m profit in the UK.
Shares in the Bolton-based business leapt when it floated on the stock market in 2014, as bankers involved in the sale raked in £29m in fees.
But its share price has crashed 65% since and the company was recently dumped from the FTSE 250 index.
More than £70m was knocked off its stock market value yesterday alone.
George Salmon, analyst at brokers Hargreaves Lansdown, said: “With uncertainty looming large over the UK economy, many expect customers to hold off on some bigger ticket purchases.”
But Andrew Wade, an analyst at Numis, said: “We believe the business has significant, and profitable, longterm growth opportunity in both the UK and Europe.”
There was better news for AO yesterday amid signs of a housing market pick-up.
Estate agency giant Haart said the number of homes coming onto the market increased 6% last month, and by 9% in London.