ii view: AO World tipped to make top profits

Full-year trading update to 31 March

• Expects revenue up 11%
• Continues to expect adjusted profit up around 15% to the top end of a £45-50 million range

Chief Executive John Roberts said:

"Our shared economics strategy and membership model, built on the foundations of brilliant retail basics, continues to deliver results. We continue to build momentum and all key metrics continue to improve, with an exciting pipeline of new initiatives ahead.

"In the coming weeks, AO will become the first company globally to reach one million Trustpilot reviews with a 4.9 rating from customers.”

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ii round-up:

AO World (LSE:AO.) today maintained hopes that full-year profit will come in at the top end of management estimates despite material cost headwinds, underlining the online electrical retailer’s drive to put profit growth ahead of sales gains.

An 11% increase in annual sales to late March is expected to drive an increase in adjusted profit of around 15%, reaching the top end of a £45-50 million guidance range. The Bolton headquartered retailer also flagged energy hedging arrangements for the financial year ahead, covering 80% of fuel and 100% of electricity usage.

Shares in the FTSE 250 company jumped 8% in UK trading having come into this latest news down by just over a fifth so far in 2026. The mid-cap index is down by less than 1% year-to-date, while rival Currys (LSE:CURY) is up around 6%.

AO sells items ranging from kitchen white goods to TVs, laptops, and mobile phones. Market share gains across product categories, reported by researcher Gfk, underpinned a 9.5% increase in business-to-consumer (B2C) revenue. 

Expected group liquidity cash of £200 million at the end of March compares to net cash held of £65 million at the end of the first half in late September. 

Full-year results are scheduled for 17 June. 

ii view:

Started 26 years ago, AO World continues to be run by founder John Roberts. Product sales accounted for most revenues over its last financial year at 83%. That was followed by mobile phone revenues at 8%, then re-commerce sales at 4%, which involves buying and selling of refurbished products as well as media such as CDs. Finally, third-party logistics is 3% of revenue, and product recycling 2%. Other group brands include musicMagpie and Elekdirect. 

For investors, rising energy prices may now pressure consumer disposable incomes as well as potentially increasing production costs and therefore product prices higher. An all-online UK-only offering compares to both store outlets and overseas exposure for rival Currys. An arguable lack of mobile phone innovation has left many consumers happy to keep existing handsets for longer, while in contrast to Currys and Argos owner Sainsbury (J) (LSE:SBRY), AO currently pays no dividends.   

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To the upside, high customer service levels supporting gains in market share have underpinned rising revenues. Management’s focus on profits sees moves to hedge energy costs going forward. A diversity of businesses now includes re-commerce brand musicMagpie and an electrical goods recycling division, while net cash held points to a robust balance sheet. 

In all, and while some caution remains sensible, a consensus analyst fair value estimate above 150p per share suggests optimism in the City. 

Positives: 

• Without the costs of a store portfolio
• Estimated total addressable market of over £28 billion

Negatives:

• Not yet paying a dividend
• Uncertain economic outlook

The average rating of stock market analysts:

Buy