AO World is ‘making progress’ towards goals, says Shore Capital after the online electrical retailer raised profit guidance for the third time since November.
Following the group’s fundraising last year, it set out to achieve operational efficiencies of at least £25mln, roughly 10% growth per year and generating a 5% EBITDA margin in the medium term.
“Today’s update, we sense, represents positive progress towards this goal,” said Shore Capital.
Analysts believe this should help “rebuild negative sentiment towards the stock as the cost base is rationalised and management refocus on UK earnings growth having disposed of German operations during the period.”
Elsewhere, Peel Hunt noted that much of AO World’s success has been driven by an improvement in costs and margins.
“Fewer discount codes, delivery charges that have stuck, more cost savings and higher than expected mobile phone RPI increases have all contributed,” said Peel Hunt.