ANALYST REACTION

Electricals retailer AO World has warned over a sharp slowdown in its UK business amid “challenging” trading since the Brexit vote as it saw annual losses widen.

The group fell deeper into the red with pre-tax losses of £7 million for the year to 31 March against £6.7m the previousyearandsaiditremained under pressure in the UK so far in the new financial year.

AO World, set to be relegated from the FTSE 250 Index later this month after seeing shares plunge, said its UK growth rate would slow “significantly” in the first quarter.

Chief executive Steve Caunce said: “Trading this year has been mixed, particularly for our UK business. In the second half of the year, trading in the UK became more challenging as we felt the impacts of dampening consumer confidence following the UK’S vote to leave the EU, subsequent price inflation and a slowdown in the UK housing market.”

The group said that with no let-up in the difficult UK conditions and tough comparatives from a year earlier, “we expect

0 Chief executive Steve Caunce said Brexit had an impact on UK trading

GEORGE SALMON our UK first-quarter growth rate to slow significantly year on year”.

AO World saw an improvement in group-wide operating losses on an underlying basis, narrowing by 46.2 per cent to £2.1m, thanks to a better first-half performance from the UK. The group has since been grappling with a jump in import costs following sterling’s slump, while rising inflation has put the squeeze on consumer spending.

Shares in the company have plunged 62 per cent since its listing in 2014, resulting in it being demoted from the second tier to the small cap index in the latest FTSE reshuffle, which takes effect on 19 June.

But despite this, UK website sales rose 14.5 per cent over the year as a whole and total UK revenues lifted 12.7 per cent to £629.7m.

AO World said trading across Europe, where AO has been investing heavily in Germany and the Netherlands, had “started well” in the new financial year so far.

However Neil Wilson, senior

“The share price has only really moved one way in the last couple of years, and the stock is now set to fall off the FTSE 250 roster”