AO World hit by cautious consumers, City Index

AO World still has a long way to go before convincing investors that it can become the Amazon of electrical appliances, according to Fiona Cincotta, Senior Market Analyst at City Index.

She made the comment as the retailer posted its final results for the year ended 31st March 2018. “Earnings losses are in line with expectations and it's encouraging to see that revenue is continuing to grow strongly in the UK and abroad, despite management easing off on marketing spending,” says Cincotta. “But UK earnings remain under pressure as competition eats into margins and cautious consumers shirk spending heavily on non-essential items.”

She adds: “Although the European business still holds much promise, it would be good to see management even the keel with some earnings growth at home to offset losses abroad.The company's outlook statement is moderately positive, with a return to double-digit sales growth in the UK offering hope that a better earnings performance lies ahead this year.”

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