AO World ‘confident’ of returning to sales growth after swinging back to profit

But revenues slumped over the year after stripping out loss-making sales and as weak shopper confidence affected demand for white goods amid the cost-of-living crisis.

AO World said it is “confident” of returning to sales growth by the end of the financial year to next March and that it will start “prudently” investing in the business again.

In a statement to accompany its results, the company said: “As we began the 2023 financial year, it was abundantly clear that a further period of economic uncertainty lay ahead. Our number one priority was to prepare AO to trade its way successfully and resiliently through whatever economic climate prevailed, and so we began the process of pivoting the focus of the business towards cash and profit generation.”

AO World founder and chief executive John Roberts said: “The significant improvement in our profit performance speaks for itself and has been achieved by focusing on our core strengths and simplifying our operations.”

He added: “Looking ahead, we intend to continue with this focus whilst also retaining the flexibility to drive growth through disciplined investment at the right pace and at the right time.”

The group said its overhaul included a “significant” reduction in its workforce, particularly affecting senior and middle managers.

It also closed a number of offices and moved to remote working across some areas of the group.

The performance turnaround comes after AO World slumped to a £12m loss in its first half, with shares hammered last year following a series of profit warnings as the cost crisis hit consumer spending on white goods, and due to labour shortages and supply chain disruption.

The company started its turnaround plan with a £40m fundraising round last summer in a bid to strengthen its balance sheet amid fears of a cash crunch.

AO has since closed its loss-making German operation as part of the shake-up and has launched action to save at least £30m a year by 2023-24.

The firm has also ditched unprofitable products while introducing delivery charges and cutting cashback incentives to reduce the cost of sales.

Mr Roberts said: “Inevitably these actions have cumulatively reduced sales, but we believe the best businesses are often defined by what they decide not to do, rather than always just chasing every opportunity.

“Rationalisation and simplification also meant that we needed fewer people. We had to say goodbye to a number of AOers, which is never an easy decision but nonetheless a necessary one.

“While the economic element of those choices may have been relatively straightforward, the human element was, of course, much harder.”

The results come after Mike Ashley’s retail empire Frasers recently bought an 18.9 per cent stake in AO World worth £75m, which followed two years of talks with between the pair regarding a potential deal.