AO World warns of 'significant' slowdown in UK growth

Clothes dryers displayed in an appliance store Image copyright Getty Images

Shares in AO World, the online domestic appliance retailer, have fallen sharply after the firm warned that growth at its UK business was expected to slow "significantly" in the first quarter.

"Challenging" UK trading conditions seen last year had continued, it said.

AO said the UK market had been affected by weaker consumer confidence after the Brexit vote, the pick-up in inflation and a slowdown in the housing market.

Its full-year operating losses widened to £12m from £10.7m last year.

However, revenues in the year to 31 March rose 17% to £701.2m.

Despite the warnings about trading conditions in the UK, the operating losses come from its business in the Netherlands and Germany, where AO said investment in its new regional distribution centre in Bergheim in Germany had been higher than it had anticipated.

Shares in AO tumbled throughout afternoon trading, losing 11% to 128p. The firm floated on the stock exchange in 2014 with its shares priced at 285p.

Neil Wilson of ETX Capital, said the company was facing a difficult challenge: "It's tough shifting fridges and big-screen TVs. Without slashing prices, and destroying margins in the process, customers can go just about anywhere.

"There are similarities between AO World and Ocado. Like the grocery pick-and-pack specialist AO World is growing sales impressively but finding it hard to turn a profit."

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