Shoppers are cutting back spending on non-essential home projects such as new kitchens, the boss of white goods retailer AO World said as it emerged a host of factors have dented sales.
John Roberts said the online company, which has returned to profit despite lower revenue, has seen “household pressures, which many people have” mean some reduction in discretionary spending.
However, he told the Evening Standard: “Distressed purchases, where a buyer needs to replace an essential product that has failed such as a fridge, are not something people cut back on.”
Roberts has also seen working from home result in shoppers needing to replace certain goods more regularly, from coffee machines to kettles.
AO World, which since last month has counted retail tycoon Mike Ashley’s Frasers Group as a major shareholder, said revenue fell 17% to £1.1 billion in the year to March. A chunk of the decline was due to a series of measures the firm took to cut costs and exit less profitable divisions.
During the period the company reduced the size of the workforce, ceased trading in Germany, and ended partnerships with housebuilders to provide goods for new-builds.
That helped the retailer record a pre-tax profit of £7.6 million, compared with a £10.5 million loss a year earlier. Adjusted EBITDA jumped to £45 million from £23 million.
In a company statement Roberts said: “The significant improvement in our profit performance speaks for itself and has been achieved by focusing on our core strengths and simplifying our operations, while still delivering the outstanding customer service for which we’re famous.”
