Weak retail sector likely to have hit AO

Electricals retailer AO World will unveil full-year results this week, with the figures expected to reflect tough trading in the UK.

The online group is forecast to see operating losses grow to £3.5 million in the year to March, which compares with a loss of £2.1m in 2017.

Andrew Wade, analyst at broker Numis, said the numbers would indicate tough trading in the UK, where consumer confidence has taken a hit.

“While disappointing to see the tough UK trading conditions impacting full-year profits, it really should not come as any surprise. We note that there has been a string of weaker updates recently from home-related retailers – Car- petright, Topps, B&Q, Safestyle, SCS, DFS, Dunelm, Dixons,” he added.

Retailers across the board have been pummelled by rising costs and falling sales as the slide in the pound following the Brexit vote has fed through, with firms selling big-ticket items particularly affected.

Nevertheless, AO World expects to report a 14 per cent increase in full-year sales to £796m, slightly above the midpoint of market expectations.

The increase will come despite the tough home market and fewer promotions, with revenue buoyed by growth in Europe, which continues to pick up pace.

In the UK, turnover is forecast to rise 8 per cent to £680m followinggrowthinthefourth quarter. AO’S shares have risen strongly since January.