Electronics retailer AO World PLC (LON:AO.) has told investors it remains “cautious” about the year ahead despite reporting double-digit sales growth for the year just gone.
Revenues climbed 14% to £796.8mln in the year ended 31 March 2018 (2017: £629.7mln), with UK sales – the group’s core market – rising 8.1% to £680.8mln.
UK retailers struggling
Turning the higher sales into increased profitability is proving difficult, though.
The Bolton-based group reported an operating loss of £16.2mln (2017: £12.0mln), largely due to investment in its European expansion and a weaker UK electricals market where it has had to cut prices to remain competitive.
Retailers up and down the country have been hit by rising costs and a slowdown in consumer spending as the pound’s post-Brexit fall has fed through.
Things look more positive in Europe, where sales grew 55% to £116.0mln (2017: £71.5mln) despite “minimal traditional marketing activity”.
Decent start to new year
Chief executive Steve Caunce said it had been “another year of good progress” for AO despite a “very competitive” UK market.
He added: “The new financial year has started well in both the UK and Europe, with UK revenue growth returning to double-digit levels against prior year.
“Whilst we remain cautious on outlook given economic and competitive pressures on the UK electricals market we are confident of achieving our stated goals of future growth in the years ahead.”
Shares rose 2.2% to 156p in early deals on Tuesday.