AO World: Double-digit growth ahead of musicMagpie deal
Electrical retailer AO World has announced double-digit growth in retail revenue and operating profit as it continues its “laser focus” on cost and efficiency ahead of its acquisition of musicMagpie.
Business-to-consumer retail revenue grew by 13 per cent year on year in the six months ended 30 September from £339m to £382m, AO World told markets this morning.
AO World’s operating profit grew 11 per cent year on year to £16m, while adjusted profit before tax grew 30 per cent, from £13m to £17m.
Subsequently, it upgraded its expected profit before tax for the year to between £39m and £44m. It expects group revenue of £1.09bn to £1.13bn, with sales to retail customers up 10 per cent for the year overall.
Basic earnings per share rose by 18 per cent, from 1.64p to 1.94p.
AO attributed its strong margin growth of 24.4 per cent to efficiency savings, which it said “have more than offset inflationary pressures and the impact of reduced basket value in the retail business as a result of lower market product pricing”.
AO World’s chief executive John Roberts said: “I’m delighted to report another successful six months for AO. We’ve had a Morecambe and Wise summer sales period; all the right volumes just not in the right categories. The wet summer weather meant we sold fewer fridges and air conditioning units and more tumble driers than we had planned. Overall, our team did a fantastic job to play this out as a satisfying score draw.
“We also made good progress beyond our core MDA [major domestic appliance] category, and I’m very encouraged with how our customers and members are responding to our improved range and value proposition in newer categories.
“Our laser focus on costs and efficiency remains which ensures, as planned, that profit grew faster than sales on the growth we’ve delivered. We’re now well into peak trading with customers responding positively to the thousands of unbeatable deals we’re offering for the Black Friday period”.
AO World is set to purchase London-listed online retailer Musicmagpie in a £10m deal, which AO said will “augment our capability and value capture in the mobile and consumer technology categories as well as improve our ESG credentials.”
The acquisition is still subject to certain conditions, including court sanction, and a hearing is scheduled for 10 December 2024.