AO World profits rocket as membership drives sales

AO World has hailed a record performance after its profits surged nearly 30% driven by cost-saving initiatives and strong growth of its membership scheme.

Adjusted pre-tax profits for the electricals specialist rose 27% to £44m for the year to 31 March, coming in at the top end of its £39m to £44m guidance.

This was driven by a 9% increase in group sales to £1.13bn and several cost-saving efficiencies, including the introduction of a new third-party warehousing solution in its distribution centre.

AO benefited from returning customers, which accounted for over 60% of orders during the year. It expects this trend to improve over time.

The retailer’s Five Star membership scheme helped to contribute to a 12% jump in B2C retail revenue to £832m.

The company’s acquisition of MusicMagpie in October contributed an additional £30m in sales for the group.

AO founder and chief executive John Roberts said: “Our 25th year in business has been our best yet. We’ve delivered a record profit before tax performance, significantly grown our sales, and continued to delight our ever-growing customer base with trusted, outstanding service.

“One of the key drivers of this performance is our Five Star membership programme, which is giving our customers even more reasons to keep coming back to us.”

Roberts said the etailer added over 1,500 new products during the year in categories such as fitness, drones, cameras and health and beauty.

“And the really great news is that there’s so much more for us to go after, with a total addressable market of over £28bn.

“Given the size of that prize, the fantastic momentum that we’re seeing across the business, and our awesome team of AOers, I couldn’t be more excited about the next 25 years. In many ways, we’re only just getting started,” he added.

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