AO World, the electricals retailer, has delivered a record year, with profits rising faster than sales and the firm returning a fresh £20m back to shareholders.
Revenue grew 11.4% to £1.27bn for the year to 31 March, while the core B2C retail business was up 9.5% to £911m on the back of market share gains across all its key categories.
Adjusted pre-tax profit climbed 16.1% to a record £50.5m, lifting the margin towards 4% and edging the Group closer to its medium-term 5% goal. On a statutory basis, profit before tax more than doubled to £50.5m.
Cash generation was very strong. Free cash flow surged to £66.4m from £26.3m, helping AO swing to net funds of £16.4m from net debt of £35.9m a year earlier, and that’s after completing a £10m buyback in March.
AO’s Founder and Chief Executive, John Roberts, said: “These results represent an incredible team effort with revenue up 11% to £1.27 billion, profit up 16% to a record £50.5 million, and the strongest balance sheet in our history. And all delivered against a backdrop of rising costs.
“We’ve also become the first retailer in the world to exceed one million Trustpilot reviews at an overall rating of 4.9 out of 5. In a category as demanding as ours, that trust is hard-won and almost impossible to copy. It sits nowhere on our balance sheet, yet it’s among the most valuable things we own.”
Buoyed by the performance, the board now plans to return a further £20m, split evenly between a special dividend and a new buyback.
AO’s attention to its relationship with its customers appears to be the driving force behind its success. AO attracted more than 720,000 new customers, became the first retailer worldwide to reach a million Trustpilot reviews (as the CEO mentioned), and saw every membership metric improve.
Switch24 launched an iPhone deal exclusively for members, and the firm has begun trialling AO Mobile ahead of a full launch in early FY27. The post-pay mobile business is now profitable, and musicMagpie has reached run-rate profitability after restructuring and a tie-up with Timpson.
Looking ahead, AO mentioned geopolitical volatility and inflationary pressure, but pointed to the largely non-discretionary nature of its range, tight cost control and continued tech investment as grounds for confidence. Developments in the Middle East and the UK’s inflation reading this morning will go a long way to easing these pressures.
AO World expects FY27 pre-tax profit to be in line with market expectations and remains committed to the 5% margin target over the medium term.