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AO World – “pleased” with the revenue growth, but why not provide the range of analysts' expectations?

By Steve Moore | Thursday 11 January 2018


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


CEO of online electrical retailer AO World (AO.), Steve Caunce, is “particularly pleased with the double digit sales growth in our UK business” and “pleased with the strong growth achieved” in Europe. Hmmm, what about the bottom-line and outlook though?

The above quotes follow third quarter (to end December) UK revenue +11.4% year-on-year and Europe in constant currency +58.4% (+62% in GBP). These meant overall revenue +16.6% and see it stated “expect the group's performance for the full year to fall within the range of analysts' expectations”.

Why not provide the range of analysts' expectations though? Anything to do with that a loss does not look as good as such as +58.4%, +16.6% or +11.4%? The half-year results, for example, having included “group operating loss of £12.0m (2016: £2.8m loss) following increased UK brand expenditure and, in line with strategy, investment in Europe”.

Steve Caunce concludes “as long as we are relentless in our focus on making things easy for our customers, we can be confident that they will continue to choose the AO Way”. Whatever that means! I though note an admitted “fiercely competitive environment” in the UK and caution with an “uncertain economic outlook (particularly in the UK)”.

The shares have responded higher on the announcement, to around 140p – and though that compares to above 180p at the commencement of 2017 and more than 300p in early 2015, it still means a market cap of approaching £650 million. I’d still much rather be on the side of the shorts, than long here.


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