Just as it was starting to win over market sceptics, web-based domestic appliances seller AO World (AO.) slumps the best part of 30% to 201.05p on a profit warning.
The washing machines-to-televisions retailer says full-year results to March 2015 will 'fall slightly below' forecasts following a disappointing fourth quarter for its core UK business and guides towards a likely profits shortfall next year too.
Today's earnings alert is unexpected, given that AO World issued a positive third quarter and Christmas trading statement in January, flagging strong festive sales and operational success handling bumper demand on 'Black Friday'.
Following on from its entry into the vast German market six months ahead of schedule, the highly-rated online retailer was beginning to win around the doubters following a controversial IPO in March last year, where its punchy rating proved prohibitive to many.
Shares initially adopted a negative stance towards the stock, largely on valuation grounds, before closing out our short position at a profit, with sentiment towards AO World beginning to turn.
Today's warning is a setback, with AO World blaming tough prior year comparatives for its failure to deliver expected fourth quarter sales and earnings before interest, taxation, depreciation and amortisation (EBITDA) growth rates.
The Bolton-based company attributes some of the sales growth generated in the second half of the last financial year and going into the current year, to 'the extra publicity' stirred by its controversial IPO. Clearly, that is not washing with investors this morning.
