AO attributes much of this growth to its Five Star annual membership plan, which offers perks such as free delivery and discounts. Members now account for over 60% of orders and have helped boost repeat purchases. AO CEO John Roberts called it one of the key drivers of this performance, adding momentum to the retailer’s diversification beyond large domestic appliances.
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GLOAO World (AO.com), the UK’s leading online electricals retailer, reported a robust increase in both sales and profits for the year ending 31 March, attributing strong results to its growing membership scheme and operational efficiencies.
Key Financial Highlights
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Adjusted pre-tax profit rose by approximately 27–32%, reaching around £44–£45 million, surpassing internal targets of £39–£44 million and consensus expectations of about £43 million.
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Revenue increased 9% to £1.13 billion, or roughly £1.138 billion, driven by a broader product range and strategic acquisition.
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B2C retail revenue climbed 12% to £832 million, significantly supported by its Five Star membership programme.
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Contribution from the MusicMagpie acquisition (October 2024) added approximately £30 million to revenue.
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The company also benefited from cost-saving measures like third-party warehousing and automation.
Membership Scheme: A Key Driver
AO attributes much of this growth to its Five Star annual membership plan, which offers perks such as free delivery and discounts. Members now account for over 60% of orders and have helped boost repeat purchases. AO CEO John Roberts called it one of the key drivers of this performance, adding momentum to the retailer’s diversification beyond large domestic appliances.
Diversification & Cost Discipline
Apart from major appliances, AO expanded into categories like fitness, drones, cameras, and health and beauty—adding over 1,500 new products. Alongside revenue growth, it implemented efficiency initiatives like third-party warehousing, AI, and offshoring to manage rising employment costs.
Mobile Business Drag
Despite the strong results, AO’s mobile division underperformed, contributing to a 40% drop in statutory profit due to impairment charges. The company may consider closing or restructuring the unit.
Outlook
AO forecasts adjusted pre-tax profit in the range of £40–£50 million for the year ahead, with ambitions of achieving over 5% PBT margins in the medium term. Despite economic pressures like rising wages and bills, it remains confident about continued sales growth.
Investor Reaction
AO’s share price dipped slightly (by about 3–4%) on the announcement due to uncertainty over its mobile business and flat near-term guidance. However, market analysts largely endorsed the performance, citing improved profitability and a return to consistent progress.
Source: AO.com
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