No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - White goods retailer AO World posted a spike in earnings on Wednesday and reiterated its full-year outlook, despite an uncertain backdrop.
Revenues jumped 11.4% in the year to 31 March, to 1.27bn, while adjusted pre-tax profits surged 16.1% to a record 50.5m on an improved gross margin.
The online-only business said it had attracted over 720,000 new customers during the year, while it was continuing to invest in its membership offering. It also noted that musicMagpie, the smartphone reseller it acquired in 2024, was now run-rate profitable on an annualised basis, following an operational restructuring and improved sourcing.
Looking to the current year, AO acknowledged that the external environment remained "uncertain", including inflationary pressures.
But it confirmed pre-tax profits for the current year remained on track to meet expectations. Consensus is currently for 54.6m. It also reiterated its medium-term target to deliver a 5% pre-tax profit margin.
"The 2026 full year was a standout year for AO," the retailer said. "While the external environment remains uncertain, including geopolitical volatility, cost inflation, shifts in consumer demand and rapid technological change, we remain confident in our ability to grow revenue, improve profitability and generate cash."
It also pledged to return 20m to shareholders though a 10m special dividend and 10 share buyback.
David Hughes, equity research analyst at Shore Capital, said: "The ongoing recovery in profitability remains central to the AO investment case. Adjusted PBT increased to 50.5m - equivalent to a margin of around 4% - marking a significant improvement from the loss-making position seen back in the 2022 full-year.
"While inflation remains a headwind, AO continues to mitigate these pressures through automation, offshoring and process simplification."
As at 0845 BST, the stock had given up early gains and was tracking 3% lower at 92.6p.
Richard Hunter, head of markets at Interactive Investor, said: "For all the progress, the share price of late has been running to keep still. Despite a bounce of 6% over the last three months, the shares remain down by 3.5% over the last year, compared to a gain of 9.8% for the wider FTSE 250, and a rally over the Christmas period evaporated.
"On a valuation basis, the shares are at a level which is undemanding historically, and the immediate outlook is brightening, such that the market consensus of the shares as a 'buy' is likely to remain in place on further growth prospects."
See latest RNS on Investegate