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AO prepares for the “most challenging” time it’s ever faced


Online electrical retailer, AO World, is focusing on the long-term as it reports a drop in revenue and profits.

John Roberts, the founder and CEO of the Greater Manchester group said it was a “turbulent time:”

“AO was founded on the belief that online is a better way to buy electricals. That belief is as strong as ever, even – and especially – as we go through one of the most challenging operating environments we’ve weathered as a company.

“The past 12 months has been a turbulent time for business and for retail in particular, and AO hasn’t been immune to those effects. Looking ahead, we certainly have more volatility to navigate, but the core fundamentals of our business remain strong. We entered the new financial year with a period of strategic realignment, and a focus on cash and profit generation.”

Today’s final results show that group revenue fell 6% year-on-year to £1.557bn, while it recorded a loss of £37m, compared to a profit of £20m in 2021.

The company was keen to point out that compared to 2020, the revenue figures were a lot more impressive, with group revenue up 52.5% over the 2 year period. Although adjusted EBITDA still declined:

  • FY22 £8.5m
  • FY21 £64.4m (down 87%)
  • FY20 £22m (down 62%)

The difference is partly due to the lockdown, during which time the group experienced dramatic growth as consumers turned to online shopping, with revenues hitting highs of £1.66bn.

Since then it explained that it has faced a number of challenges, not least global supply chain shortages and increased shipping rates.

“We entered the year with optimism but as the year progressed, our business faced increasing macroeconomic headwinds including global supply chain disruption, labour shortages and a well-documented growing cost of living crisis for consumers,” read today’s report.

“In Germany, as Covid restrictions were lifted, customers returned to pre-pandemic behaviours to a greater degree than we anticipated.  As a result of this combination of global factors, our markets weakened considerably as the year progressed.”

Going forward, AO stated that it would be “realigning” the business as it undertakes a “strategic pivot to focus on cash and profit generation.”

As it extends into new sectors in the UK, its addressable market has grown to £23.4bn.

It has signed an “extendable” 5 year contract with Homebase to supply appliances and installation and recycling service to Homebase’s customers. This includes MDA and audio-visual appliances on an exclusive basis. It is in discussions with other kitchen retailers about similar partnerships.

“This is an unprecedented environment for business planning as the post-pandemic retail environment is substantially shifting, which presents both challenges and opportunities for AO as a leading online electricals retailer,” it continued.

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