AO World’s losses mount as sales slump

AO WORLD, the online electricals retailer, has posted widened half-year losses after sales fell, and cautioned that trading will remain under pressure amid the cost of living crisis and supply chain woes.

The group reported pre-tax losses of £12m for the six months to Sept 30, against losses of £4m a year earlier, as revenues tumbled 17pc to £546m.

John Roberts, the founder and chief executive, said the company’s turnaround plan to strip out costs was paying off as it revealed full-year underlying earnings would now be at the top end of the £20m to £30m previous guidance.

The company’s shares have been hammered over the past year after a series of profit warnings as the cost crisis has hit consumer spending on white goods at the same time as labour shortages and supply chain disruption.

The company started its turnaround plan with a £40m fundraising in the summer in a bid to strengthen its bal- ance sheet amid fears of a cash crunch.

AO has closed its loss-making German operation as part of the shake-up and has launched actions to save at least £30m a year by 2023-24 – including by cutting management jobs.

The company has also shed unprofitable products, while introducing delivery charges and cutting cashback incentives to reduce the cost of sales.

It added it would continue to “right size” its cost base to market conditions and the trading outlook.

AO World said: “We are, of course, not immune to the challenging and uncertain consumer environment, and we expect to continue to be impacted by both the cost of living crisis affecting consumer spending as well as by ongoing supply chain issues.”

Mr Roberts said: “During the first six months of the year we’ve made good progress with our strategic realignment.” Shares in the company were 16.8pc higher at 61p yesterday.