AO World has said that it expects to hit at least the top of its previous profit before tax guidance, set between £28m-33m.

The white goods retailer said in its pre-close update for the financial year that it expects its full year revenue to reach £1.04bn.

It added that its "core business continues to trade positively through Q4" and AO.com has returned to revenue growth during the quarter, as expected.

The revised expectations come after the firm, which counts Mike Ashley’s Frasers Group as a major shareholder, cut a number of jobs in the latest financial year and closed its German business.

Founder and chief executive officer at AO World, John Roberts, said: "I'm pleased with the clear progress that we're making after pivoting our focus to profit and cash generation during the 2023 financial year.

"As we expected at our half year results, we returned to revenue growth in our core business during Q4 and, as a result, we're entering the new financial year with good momentum. With net funds on our balance sheet and a clear plan, we remain confident in our ability to deliver on our ambition for 10-20% revenue growth in the year ahead and medium-term profit guidance of 5% adjusted PBT margin."

AO World said that at the period end, it expects to have net funds of over £30m and its revolving credit facility of £80m has been extended with existing lenders to April 2027 on the same terms.

Investment director at AJ Bell, Russ Mould, added: "Like many online-based retail businesses, AO was well-placed during lockdown but subsequently its fortunes took a turn for the worse. Having returned to a more sustainable path towards profit and cash flow in its financial year to the end of March 2023 the company has now confirmed revenue guidance for the current year and flagged profit at the top end of what was previously guided.

"For the year about to start, the group still hopes to see strong revenue growth and is sticking with its medium-term margin target.

"The basics of retail are fairly simple – have the right amount and the right kind of stock, sell it a price customers will stomach but which still allows you to make a decent profit, and make sure the customer experience is such that they will buy from you again. AO World seems to be getting more of this right and that’s coming through in its financial performance."

AO expects to publish its full year results to 31 March 2024 on 26 June.

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