AO World PLC (LON:AO.), the online electrical goods retailer, said UK sales jumped by more than 20% in the year just ended as coronavirus (COVID-19) lockdowns forced people to shop over the internet.
The FTSE 250-listed group warned though that 70% of electrical purchases are replacements and a fall in consumer confidence due to an economic slowdown might lead to people putting off buying big-ticket items.
A drop in UK housing transactions due to a weaker market would also affect demand, it said.
Revenues in the year to end-March, 2020, rose by 15.9% to £1.05bn, with Europe seeing lower sales as the company shut its operation in the Netherlands. Underlying losses were cut to £3.8mln (2019: £13mln) and the retailer posted a small pre-tax profit of £1.5mln after a big foreign currency swing in its favour.
Germany continued to see heavy losses, but AO said it is determined to stick with it.
European revenues were 5% lower at €165mln but the German business will start to contribute once sales reach €250mln, the group added.
Revenues in the UK rose by 20.3% to £901.6mln helped by growth in third party channels such as Amazon and eBay. AO’s own website sales rose 10%.
John Roberts, AO World chief executive, said: "I'm pleased that we have made substantial progress, closing the year in good shape after getting AO fit and focused on the future.
“Covid-19 has accelerated a shift in customer behaviour towards online shopping and we now need to cement that change.”
Peel Hunt, the broker, said the key to continued share price recovery is European profitability, a return to double-digit UK growth and consistent FCF generation.
"AO looks far better placed to achieve these goals over coming years," it added.
Shares dropped 3% to 159.4p.
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