AO issues profit warning following ‘tougher than expected’ conditions

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Online retailer has warned that profits for the financial year may fall below earlier expectations, in a statement released by the company.

Despite showing ‘strong revenue growth’, the retailer said that ‘the Company expects growth in revenue and adjusted EBITDA for the UK business for the current quarter to be lower than anticipated. As a consequence, the Company expects the results for the financial year ending 31 March 2015 will fall slightly below market expectations’.

The statement cites the attention around the flotation of the company on the stock market last year having affected revenue growth and subsequently impacted on year-on-year growth rate.

AO says that at the time of the Q3 trading statement, it expected to meet the market’s expectations for both revenue and adjusted EBITDA in the UK, ‘even taking into account the loss of a logistics contract, the cost impact of driver legislation changes and the adverse effects of Black Friday, which did not produce incremental sales, but condensed sales into a shorter time period’.

The company expects results in revenue and adjusted EBITDA for the UK operations of £470m to £475m and £16.5m respectively, which it adds will likely impact on the business in the next financial year.

john roberts

CEO John Roberts (pictured) commented: “AO has experienced tougher than expected trading conditions in the final quarter of the year, as compared to Q4 in FY2014. While we are disappointed that sales and profits are going to come in slightly below expectations, we remain committed to our market-leading, customer-focused business model.”

He continued: “Having delivered on all our strategic objectives through this financial year, we are confident of our ability to continue to deliver for our customers and to further drive the success of AO in the interest of all stakeholders.”

AO added that the board is ‘confident’ that the fundamental business model remains strong and that trading in its new market Germany is advancing, while the introduction of the AV category in the UK is ‘developing well’.

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