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AO World says UK revenue up 8% in first-quarter, although core markets saw slower performance in June

The online domestic appliances retailer said it remained “on track to deliver its long-term strategic plan and the Board's expectations for the full year remain unchanged”
Appliance mountain
AO added: “Our Europe business has performed in line with our plan during the period, with continuing strong year-on-year revenue growth of 46.2%"

AO World PLC (LON:AO.) shares rose on Thursday after the online retailer said its UK revenue increased by 8% in the first-quarter, reflecting strong performances in April and May, although its core markets saw a slower performance in June, impacted by weaker consumer demand.

In a trading update to be delivered at today’s annual general meeting, the web-based domestic appliances retailer said it remained “on track to deliver its long-term strategic plan and the Board's expectations for the full year remain unchanged.”

READ: AO World posts double-digit sales growth for year just gone but remains “cautious” on outlook

The FTSE SmallCap group added: “Our Europe business has performed in line with our plan during the period, with continuing strong year-on-year revenue growth of 46.2% in constant currency (up 48.8% on a reported basis), and we continue our strategy of limited traditional marketing as planned.“

The company said its half year results for the six months ending 30 September 2018 will be announced on 20 November 2018.

In late morning trading, shares in AO World were 1.4% higher at 146.4p.

More than up with events, says ShoreCap

However, Shore Capital retained a ‘sell’ rating on the stock.

In a note to clients, the City broker’s analysts said: ”Overall while FY expectations are unchanged the trading performance from the UK division is disappointing given the soft comparatives that the company was cycling from Q1 last year. In terms of valuation AO trades on a forward one year EV/EBITDA multiple of 180x and on a 2020 multiple of 31x.”

They added: “Given our concerns about the scale of the losses across the European footprint, where the business remains sub-scale, we continue to believe that the current valuation is more than up with events and reiterate our SELL rating.”

 -- Adds share price, analyst comment --

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