- Continued double-digit growth
- Profit guidance raised
- Inaugural buyback launched
AO World’s (AO.) shares sparked up 11.5% to 93p after the online electricals retailer upgraded annual profit guidance and delighted investors by launching its first-ever share buyback.
The laptops-to-mobile phones seller’s latest upwards earnings revision reflects continued double-digit growth in the core retail business, while the launch of a £10 million buyback demonstrates management’s confidence in the company’s positive trading momentum and ‘strong’ cash generation.
PLUGGED-IN TO GROWTH
In an update ahead of its AGM (annual general meeting), AO World insisted it continues to perform ‘strongly’, despite the tough backdrop for big-ticket spending.
The company’s core retail revenues are expected to be up 11% year-on-year in the first half to 30 September 2025, while group revenue is expected to increase by 13% year-on-year.
As a result, AO World raised its full-year 2026 pre-tax profit guidance from a range of £40 million to £50 million to between £45 million and £50 million, a mid-point uplift of 6%.
Backed by Mike Ashley’s Fraser’s (FRAS), the Bolton-headquartered white goods seller has re-focused on driving profitability in recent years.
Results for the year ended 31 March 2025 revealed a 32% rise in adjusted pre-tax profits to a record £45 million, above the top end of management’s previously-upgraded £39 million to £44 million guidance range.
Group revenue grew 9% to £1.138 billion, reflecting a return to growth in the core retail business and a £30 million revenue contribution from the recently-acquired musicMagpie, which has strengthened AO World’s offering in the electricals market.
WHAT DID THE CEO SAY?
‘Our strategy as set out at our full-year results is working and we have an exciting pipeline of further value to deliver for customers in H2,’ said CEO John Roberts, the fridge magnate who famously founded AO World as a one pound pub bet.
‘Our Five Star membership programme continues to go from strength to strength as our customers realise the exceptional value that it offers. This, combined with our ongoing efforts to broaden our product range, is an increasingly key driver of our performance.’
Jefferies, which has a ‘buy’ rating on AO World with a 150p price target, commented: ‘While only £10 million at this stage, we think the signalling is important from a confidence perspective - only 3 months ago, management was highlighting the importance of continuing to build balance sheet resilience.’
The broker added: ‘Now, even after factoring in the £10 million buyback, we increase our full-year 2026 net cash forecast from £35 million to £45 million, and see this as a clear demonstration of the momentum AO has built.’
