AO World expected to post substantial annual losses

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AO World losses

Electronics retailer AO world is expected to report continuing financial decline amid the release of its annual results on Tuesday.

In the year to March losses are predicted to come in at between £5.9 million and £9.2 million, following a £6.7 million loss in 2016.

The rising import costs thanks to the decline of the sterling have battered the retailer’s already dwindling margins.

This has driven shares down 62 per cent since it went public three years ago, leading to speculation it will leave the FTSE 250 in the next reshuffle.

In March the retailer sold nine per cent of its shares in order to raise £50 million to fund European expansion, despite confirming it will not make a profit this year.

READ MORE: AO raises £50 million in share capital despite predicting losses

“To be fair to AO, not all of the headwinds it is facing are its own doing. Sterling’s weakness means importing electricals is now more expensive, while worries over the UK economy will have also had an impact,” equity analyst at Hargreaves Lansdown George Salmon said.

“After all, demand for big ticket items can be volatile, and is prone to wax and wane with the fortunes of the economy.

“After already confirming a weaker than expected second half performance in its most recent trading update, we’ll be keeping an eye on the group’s progress in Europe, where the profits from the more established UK business are being re-invested.”

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