AO World saw its sales drop 17% in the six months to 30 September but the board was optimistic about the remainder of the year and eyed strong trading over the end of year festive period.
AO World sales fell to £546m in the first half, but were confident stringent management of costs would achieve full year adjusted EBITDA at the top end of their £20m-£30m guidance.
The optimism of their forecasts caught the attention of investors on Tuesday and AO World shares were over 15% higher at the time of writing. AO World shares are still 42% weaker year-to-date.
Analysts at AJ Bell highlighted the challenging nature of the retail environment and suggested the company were pinning their hopes on a strong festive period, which will be instrumental in achieving their guidance.
“First-half results from online electronics retailer AO World are being released in the calm before the storm which is Black Friday and Cyber Monday when the company will hope to be extremely busy,” said Russ Mould, investment director at AJ Bell.
“AO World was a pandemic winner whose fortunes have taken an alarming turn since, but these results hint that the company may have bottomed out and is ready to recover.
“The backdrop is undoubtedly difficult. Given the pressures on household budgets, people are putting off purchases of new appliances where they can, though to some extent if your washing machine or fridge freezer breaks down, a replacement is a non-discretionary item.
“This set of numbers from AO World is as messy as the bottom of a student’s fridge, but management guidance is notably robust, with full-year earnings expected at the top end of expectations. Though it’s important to note this is largely being driven by cost cutting, rather than any inherent strength in the business.”