AO World has posted a 32% jump in like-for-like (LFL) adjusted pre-tax profit to £45m in its latest full-year results.
The online electrical goods retailer revealed a profit before tax margin of 4.1% and said it was making “good progress” towards its medium-term target of 5%.
AO, publishing its results for the year to 31 March, also saw its LFL group revenue increase by 7% in the year, to total £1.1bn.
The FTSE 250 group ended the financial year with net funds of £23m after committing around £35m in cash costs relating to its musicMagpie acquisition.
AO also increased and extended its revolving credit facility in the year, with the total facility rising from £80m to £120m which remains undrawn and will now expire in October 2028.
Head of markets at interactive investor, Richard Hunter, commented: “[AO]’s lack of a store portfolio means that in comparison to more traditional retailers, AO is a relatively capital light business, and its warehousing operations are also largely owned by the group.
“The group is now concentrating on these overheads having previously streamlined its operations, with a third-party warehousing solution which went live in April, while at the same time a decision to implement delivery charges on all orders previously boosted service revenue without a material impact on sales.”
Commenting on the market reaction to AO’s figures, Hunter added: “Over the last year, the shares have struggled, with a decline of 7% comparing to a rise of 4% for the wider FTSE 250.
“Nonetheless, on a valuation basis the shares are at a level which is undemanding historically, the outlook has been raised for the coming year to adjusted pre-tax profit between £40m and £50m and there has been some significant progress. As such, the market consensus remains at a buy on growth prospects.”
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