AO World reveals £15m Brexit stockpiling amid underlying earnings woes
The retailer has boosted stock of fast-moving goods to prepare for possible no-deal Brexit disruption.
Electricals retailer AO World has warned that underlying earnings for the full-year are set to come in at the lower end of market expectations as it revealed £15 million of Brexit stockpiling.
The group – which recently saw founder John Roberts swoop back to take the helm – said it had boosted stock of fast-moving goods by around £15 million to prepare for possible no-deal Brexit disruption.
“This will help ensure we can continue to deliver our market-leading proposition to our customers,” it said.
AO World said that, as well as underlying earnings coming under pressure, it is also facing around an extra £2.5 million in costs from a management reshuffle since Mr Roberts’ return and a hit from a loss-making contract in Germany.
It had been forecast to report underlying earnings ranging between a loss of £400,000 to a profit of £2 million.
But it added that, on a statutory basis, results were in line with City expectations.
Shares fell 3%.
In its full-year trading statement, the group said it is expecting to report a 9.8% rise in UK revenues, or 5.4% higher when the boost from its recent Mobile Phones Direct acquisition is stripped out.
Overall revenues are set to lift by around 13%, or 9% higher with Mobiles Phones Direct stripped out.
Mr Roberts, founder and chief executive of AO World, said: “Over the last eight weeks we have created a mindset shift from the numbers delivered in full-year 19; we are setting about realising our opportunities with pace and energy.”
He added: “I am delighted to once again have the privilege to lead the business and excited by the scale of value creation that lies ahead of us for the benefit of all stakeholders.”
Analyst Caroline Gulliver at Jefferies said: “The lower gross margin gains in Germany put full-year EBITDA (underlying earnings) at the low end of consensus, but a newly reinvigorated management team with John Roberts back at the helm is accelerating the pace of change.”
Mr Roberts returned to the top job in January after a two-year hiatus, replacing Steve Caunce, who the group said quit to “step back to a less demanding business role and rebalance his lifestyle”.
It followed half-year results showing AO World suffered an £11.7 million operating loss for the six months to September 30.
FTSE 250-listed AO World, which has its headquarters in Bolton, operates across the UK, Germany and the Netherlands.