July 14, 2020 / 6:39 AM / a month ago

Online electrical retailer AO World posts profit, sales rise

(Reuters) - Online electricals retailer AO World on Tuesday reported a jump of more than 50% in annual core profit and a rise in sales, sending shares in the British company to two-year highs.

Printers, breadmakers and Nintendo Switch video consoles were in demand, it said, even after British stores began to reopen.

“We haven’t seen a material impact from stores reopening and of course, some stores will never reopen,” CEO John Roberts told reporters.

Operational changes during the lockdown had raised staffing costs, however, and it warned that a fall in consumer confidence as recession sets in this year may lead to delayed purchases of big-ticket items.

AO sells washing machines, fridges, cookers, televisions as well as mobile phones.

Adjusted core earnings jumped by 53.6% to 19.6 million pounds ($24.57 million) on sales up 15.9% to 1.05 billion pounds for the year ended March 31, it said.

AO shares jumped as much as 7% to a two-year high at the market open but were flat by 0901 GMT.

Lockdowns have buoyed online shopping, prompting Morgan Stanley to nearly double its forecast for U.S. online sales growth to 25% this year.

The UK’s Ocado said on Tuesday it was confident that the surge in online grocery shopping due to the pandemic would continue.

Online fashion retailers Zalando and Boohoo also expect to top market expectations for sales and profit.

AO, which launched in Germany in 2014, said it continues to expect to achieve positive core earnings there on revenue of around 250 million euros ($284 million) this year.

Reporting by Tanishaa Nadkar in Bengaluru; editing by Devika Syamnath and Jason Neely

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