AO World profits rise twice as fast as sales after 'obsession' with customer service

AO World has seen its profits soar to more than double the pace of its sales, overshadowing its revenue growth.

The online electrical retailer informed markets that it anticipates a retail revenue uptick of around 12% for the year concluding March 31, as reported by City AM.

The company forecasts a like-for-like revenue climb of roughly seven per cent year on year to £1.1bn, indicative of "reductions in B2B and mobile as we focus on profitable growth," AO elaborated.

"AO is back to being a highly efficient growth machine; we are reaping the rewards from the execution of our strategy and 25 years of unwavering obsession with amazing customer service," CEO John Roberts enthused.

"We're carrying good momentum into the new financial year and are pleased to be guiding to another year of double-digit revenue growth in our B2C Retail business, and for profits to keep growing faster than sales."

Back in November, during its semi-annual financial disclosure, AO announced a robust profit margin of 24.4%, attributing this success to cost-efficiencies gained through trimmed administration and warehousing expenses.

"Our strong performance shows that our model is working," remarked Roberts.

"We're cementing our position as the most trusted electrical retailer and are increasing our frequency and share of wallet with customers."

Last November's acquisition of Musicmagpie by AO, at a mere £10m, is notably modest compared to its market value at the time of its IPO in 2021.

The company anticipates that the post-acquisition performance of Musicmagpie will add approximately £30m in revenue with a "negligible loss" impacting the full-year financial outcomes.

In conjunction with its trading update, AO has confirmed the promotion of Mark Higgins to the position of Chief Operating Officer, which will complement his current responsibilities as Chief Financial Officer.

This change is said to be a reflection of "the way Mark and John have been running the business together for some time", according to the firm.