Shares in AO World (AO.) rallied 5% to 93.2p after the electricals retailer delivered another upgrade to FY26 profit guidance.
Despite the tough consumer backdrop, AO World is reaping the benefits of management’s ‘pivot to profit’ strategy.
CEO John Roberts said ‘the numbers speak for themselves again’ and he is ‘delighted to keep doing our talking on the pitch’.
FY26 adjusted pre-tax profit is now expected to be at the top end of the previously upgraded £45 million to £50 million range.
Gaining share
That represents 15% year-on-year profit growth from AO World. This robust performance was underpinned by the retailer’s top-notch customer service. And it was delivered despite stiff cost headwinds.
The laptop-to-washing machine seller’s total revenue sparked up around 11% amid market share gains across all key categories. Initiatives including the roll-out of AO World’s Five Star membership program and a mobile phone trade-ins partnership with Timpson are contributing to its success.
Living the dream
‘In the coming weeks, AO will become the first company globally to reach one million Trustpilot reviews with a 4.9 rating from customers,’ said Roberts.
‘Having founded AO 26 years ago in a small office with three people and a dream, I am incredibly proud to have reached this milestone.’
For FY26, Equity Development forecasts adjusted pre-tax profits of £50.1 million. The research house sees this rising to £53.5 million and £62.9 million in FY278 and FY28 respectively.
‘AO’s strategy continues to deliver,’ wrote Equity Development. ‘Performance was underpinned by excellent customer service, evidenced by nearly one million Trustpilot reviews, alongside sustained trading momentum and energy hedging providing resilience into FY27.’
Risks to the AO World bull thesis include pressure on disposable income and potential for supply chain disruption.
The company also faces competition from Amazon (AMZN), Currys (CURY) and Marks Electrical (MK:AIM).
However, AO World has plenty of scope to increase its major domestic appliances market share. And Roberts is determined to grab a bigger slice of the wider £28 billion electricals market.
On balance, a year-to-date share price drop looks a good entry point for investors. We note AO World’s shares are trading well below Equity Development’s 170p fair value estimate.
Read the press release here: https://www.ao-world.com/investor-centre/regulatory-announcements/
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