Greater Manchester-based online electricals retailer, AO World, is to return £20m to shareholders in dividends and share buybacks after world Cup TV sales and a cost-cutting outsourcing drive saw the firm report record profits for the year ended 31 March, 2026.
The FTSE 250 firm said it has already moved the majority of its inbound sales business overseas, with the bulk of its customer contact operations to follow next March, blaming the prospect of an extra £8.5m per year in costs due to hikes to employer national insurance contributions and minimum wage levels.
Retailers have ramped up pressure on the government in recent weeks over these tax and policy changes, warning that higher employment costs risk worsening the youth unemployment crisis.
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AO said it has already moved 150 jobs to South Africa, with 50 more to follow, and anticipates “the majority of our customer engagement operations being based overseas by the end of the financial year.”
The move had “maintained service quality” and saved the retailer £2m this year, expected to produce annual savings of £4m moving forwards.
AO World also reported that Music Magpie, which it acquired in late 2024, is now “run rate profitable.” The second-hand online marketplace had been turning a £6m loss in a “challenging” economic environment when it was snapped up by AO World.
Music Magpie added £3.5m in advertising costs, £7.3m in warehouse fees and £11m in administrative spending to the new owner’s outgoings in the year to March, but AO World said its new acquisition was responsible for “the majority” of its 181 per cent jump in revenue in the second-hand commerce market, to £120m.
The turnaround of Music Magpie included an exit from its loss-making US operations and the consolidation of its warehouse footprint.
Profit before tax across the AO World group jumped by 145 per cent to £51m, while revenue climbed 11 per cent to £1.3bn. The group achieved total liquidity of £201m at the year’s end, with profit converted to cash resulting in free cash flow of £66m, up 152 per cent from the year prior.
AO World also announced a new £10m special dividend and a separate £10m share buyback programme, reflecting its “strong cash generation” over the past year.
The firm also highlighted its position as the UK’s “most trusted electrical retailer” after becoming the first retailer globally to exceed one million Trustpilot reviews with a 4.9-star rating.
Founder and Chief Executive, John Roberts, said: “These results represent an incredible team effort with revenue up 11% to £1.27 billion, profit up 16% to a record £50.5 million, and the strongest balance sheet in our history. And all delivered against a backdrop of rising costs.
“We’ve also become the first retailer in the world to exceed one million Trustpilot reviews at an overall rating of 4.9 out of 5. In a category as demanding as ours, that trust is hard-won and almost impossible to copy. It sits nowhere on our balance sheet, yet it’s among the most valuable things we own.
“AO Membership continues to go from strength to strength and there’s more to come with the launch of Switch24 and AO Mobile, which combined, are the best way to get the latest iPhone paired with an all-you-can-eat SIM at a market-leading price. It’s scaled economies shared and is exactly what our members want at a time when every pound counts.
“We’ve also announced today our intention to return a further £20 million to our shareholders, which is a reflection of the cash this business now generates and the discipline with which we allocate it.
“None of this is the work of one person. It’s down to every AOer and every partner who shares our obsession with looking after customers. I started AO 26 years ago with a small team and a big idea and I’m as excited about the next 26 as I’ve ever been.”
