Ao.com warns on profits after post-IPO publicity drops off

In a trading update, the online electricals retailer revealed that revenue and adjusted EBITDA for the year ending March 31 will “fall slightly below market expectations”.

Ao.com revealed it has failed to meet expected sales growth in the fourth quarter of its current financial year after struggling to build on strong sales from the same period last year.

The retailer reported it “is now apparent that some of the revenue growth in the second half of FY14 and going into FY15 was due to the extra publicity surrounding the company at that time”.

Ao.com chief executive John Roberts described the profit warning as a “very slight miss” because the etailer is only 1.5% to 2% off its sales targets and now forecasts sales of between £470m and £475m.

Profits are expected to come in at £16.5m as opposed to the previously forecast £18.6m and Roberts said the impact on profits after a slight drop in sales shows how profitable incremental sales are for the etailer.

Roberts said the etailer did consider investment in marketing in order to make up for post-IPO publicity falling off, but ruled it out.

He said: “That was an option to go and do non-commercial marketing and drive the sales to tick boxes for PLC land but that is not what we are about.”

Roberts added: “We remain committed to our market-leading, customer-focused business model. Having delivered on all our strategic objectives through this financial year, we are confident of our ability to continue to deliver for our customers and to further drive the success of Ao in the interest of all stakeholders.”

At the time of its third-quarter trading statement on January 12, the etailer said it still thought it would meet market expectations despite the loss of a logistics contract, costs associated with changes to driver legislation and the adverse effects of Black Friday, which condensed sales into a shorter time period and did not produce incremental sales.