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UK DIY News warns on profit logo

CEO of electricals e-tailer John Roberts remains confident in the company's ability to deliver for its customers and to drive success for its shareholders, despite issuing a profit warning today.

John Roberts, CEO of online electricals retailer, admitted today that the business has experienced "tougher than expected trading conditions in the final quarter of the year", as the company issued a profit warning.

In a trading statement ahead of its year-end on 31 March, the retail executive said he was "disappointed" with the trading news, but said he remained confident in the company's "customer-focused" business strategy.

The update to the City indicated that AO found it difficult to achieve expected sales growth, which has negatively affected adjusted EBITDA.

It suggested some of the revenue growth in the second half of the last financial year and the start of this one was due to the extra publicity surrounding the business at that time. This month marks the one-year anniversary of the company's successful IPO.

As Roberts alluded to at the recent MetaPack Delivery Conference, AO's note today said that the pre-Christmas markdowns around Black Friday did not produce incremental sales, but instead condensed sales into a shorter time period.

Annual revenue for the company's UK operations is expected to be between £470 million and £475 million, with adjusted EBITDA circa £16.5 million. The factors referenced, as well as the loss of a logistics contract and the cost impact of driver legislation changes, are also expected to impact the performance of the company in the next financial year.

"We continue to redefine retailing in our chosen categories with unbeatable prices, huge range and availability, complemented by amazing service," explained Roberts.

"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."

The board reiterated its confidence in the company's fundamental business model, with its new venture in Germany reportedly advancing well and other territories continuing to be assessed for further international expansion. The recent introduction of the audio-visual category in the UK is said to have been well received.

Source: Ben Sillitoe - Essential Retail

25 February 2015

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