Shares boost for AO World after full-year outlook increased
Online electrical appliance retailer AO World sparked a shares surge after upping its full-year outlook thanks to stronger-than-expected sales.
The group saw shares race 8% higher as it said both sales and earnings beat its forecasts in the final three months of its year to the end of March.
AO World is now expecting full-year underlying earnings to rise to about £17 million, which is higher than the £16 million pencilled in by the market.
The Bolton-based group is also set for another double-digit hike in annual UK sales, saying it is in line for web revenues to grow by about 27% and overall UK turnover to lift by around 18.5%.
AO World said it continued to gain market share, which comes at the expense of rivals in a notoriously difficult sector.
The consumer electricals market is highly competitive in the UK and industry experts said conditions have been particularly challenging in recent weeks.
Jefferies analysts said AO World delivered a "robust close to the year". T hey added: "As always, we shouldn't try to make too much of one quarter."
Shore Capital experts said AO World's performance was " encouraging, given the latest market data from an eCommerce industry association implied a challenging environment for electricals in recent weeks".
Despite the better-than-expected fourth quarter trading, the full-year forecasts suggest a slowdown in the group's impressive sales growth since the previous year, when AO.com revenues jumped by 32.9% in the UK in the previous year.
It has suffered heavy start-up costs as it has launched in new markets across Europe, with operating losses of £8.9 million in the first half of its 2015/16 year.
The group recently extended its reach to the Netherlands on March 1.
It said a focus on cost control is set to to help underlying annual earnings across its European arm to come in "slightly" better than expected.
AO World was launched in 2000 and floated on the stock market in February 2014 at 285p a share. Shares have since fallen back to just under 187p at current prices.