Online electrical goods retailer AO World saw its profits almost triple, helped by a surge in tumble dryer sales during a wet winter and strong Euro 2024 TV sales.
Revenues at the retailer, which sells 15% of household appliances in the UK, have also been boosted by the continued popularity of air fryers, which it says are driving customers to look for cheaper alternatives to takeaways amid a cost-of-living crisis.
The company’s pre-tax profits rose to £34.3m in the year to March 31, compared with £12m in 2023, an increase of 186%.
In an update on Wednesday, the company said its winter tumblers were one of its best-selling items due to heavy rainfall. The Met Office said Britain experienced its eighth wettest winter on record, with rainfall 29% above normal.
The company also said sales this month were up 54% from a year ago, driven by a surge in customers buying new TVs due to the men’s football tournament Euro 2024.
Demand for more energy-efficient products has also increased, with sales of A-rated cooking appliances and heat pump tumble dryers increasing significantly.
The strong annual result marks a turnaround from two years ago, when AO’s profits fell to £8 million from £64 million the previous year, which the company blamed on falling sales and customers cancelling product warranties to save money amid rising living costs.
In its update on Wednesday, AO said churn rates for its product protection plans had fallen and profitability had improved.
The company’s full-year sales fell 9% to just over £1 billion but profits rose, which the AO said was the result of the company’s shift towards focusing on profits and cash generation and controlling overheads.
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But AO’s mobile division, MobilePhone Direct, continues to struggle, with new contracts down 14% from last year. The company said market pressures and increased competition for customers had forced it to implement “unsustainable price cuts to gain market share”.
John Roberts, founder and chief executive officer of AO, said: “We have made good progress on our profit performance, which is testament to the success of our strategic shift to focus on profit and cash generation.”
“We now have a much simpler and more efficient business, with superior sustainable unit economics, performing better for our customers than ever before. We are now focused on profitable top-line growth and are targeting double-digit revenue growth in FY25.”
