AO World warns of slower UK trading

L Retailer widens losses in latest fullyear results, saying trading was ‘mixed’

market analyst at ETX Capital, said the company is “burning cash” on its expansion in Europe “that is yet to deliver cash”. He added that if it “stuck to the UK it would be in the black,” with this arm delivering a profit of £15.6m.

“White goods are a necessity,” he continued. “But given the products, delivery schedules and warranties are virtually the same as rivals’, it’s hard to differentiate on anything other than price. And when price is the only reason to go with a company, said firm is going to find it tough to improve margins.”

George Salmon, equity analyst at Hargreaves Lansdown, said there is “little sign of the current headwinds facing the group easing anytime soon.

“With uncertainty looming large over the UK economy, many expect customers to hold off on some bigger-ticket purchases. Couple this with rising costs from the weaker pound, and suddenly there is much more pressure on the group than at the time of its float in 2014.

“The news that investment in the European expansion has been higher than anticipated isn’t helping the cause either. 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.”