// AO.com sales and costs expected to fall following business realignment
// Closure of German business and retail partnerships reflect new strategy
Online electrical retailer AO.com posted a full-year pre-tax loss of £37million, compared with a profit of £20million for the same period last year.
The group expects sales to fall go £1billion to £1.25billion in its current year, down from £1.56billion last year.
Group adjusted EBITDA for the current year will be in the range of £20-30million, with the usual weighting towards the second half of the year.
The group pointed to revenue growth of 52% over the two-year period since 2020 and cited the resilient performance in its UK business, with a year-on-year decline of 5% against an “extraordinary comparative performance” during the pandemic in 2021.
Group EBITDA of £8.5m was impacted by increased staff costs added during Covid in the second half of the 2021 financial year as well as increased marketing and logistics costs
Overall liquidity of £50m was down from £143m from the year before, although the retailer capital-raised post year-end, securing additional liquidity of £40m with an £80m revolving credit facility extended until April 2024
READ MORE: AO.com ditches Tesco concession trial
After a strategic review, AO.com decided to close its German business to focus on the UK market and the company said that the new financial year marks a “period of realignment” as it executes a strategic pivot to focus on cash and profit generation.
AO.com estimates the closure of its German business of no more than £5m, at the lower end of its original estimate.
The electricals specialist has also signed a new five-year contract with Homebase to supply appliances and installation and recycling services to its customers, with further partnerships in discussion.
In the short term, business realignment is expected to reduce both sales and costs, but in the medium term AO.com hopes to deliver average revenue growth of 10% or above per annum.
AO founder and chief executive John Roberts said: “The past 12 months has been a turbulent time for business and for retail in particular, and AO hasn’t been immune to those effects.
“Looking ahead, we certainly have more volatility to navigate, but the core fundamentals of our business remain strong. We entered the new financial year with a period of strategic realignment, and a focus on cash and profit generation.”
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