The online electrical goods seller AO World has enjoyed a near-tripling of profits thanks in part to booming tumble dryer sales during the wet winter and televisions for Euro 2024.
Revenues at the retailer, which sells 15% of all domestic appliances in the UK, were also bolstered by the continued popularity of air fryers, with the company attributing this to customers looking for a cheaper alternative to takeaways amid the cost of living crisis.
Pre-tax profits at the company rose to £34.3m in the year to 31 March, marking a 186% rise compared with £12m posted in 2023.
In its update on Wednesday, it said tumble dryers were among its biggest sellers during the winter because of the heavy rain. According to the Met Office, the UK experienced its eighth wettest winter on record, with rainfall 29% higher than average.
It also said the Euro 2024 men’s football tournament had prompted a jump in the number of customers upgrading their TVs, with sales this month 54% higher than the previous year.
There was also growing demand for more energy-efficient products and sales of A-rated cooking appliances and heat pump tumble dryers increased significantly.
The strong annual results mark a turnaround from two years ago when AO profits fell to £8m, down from £64m posted a year before. The business blamed declining sales and customers cancelling warranties on products to save money during the cost of living crisis.
In Wednesday’s update, AO said there had been a reduction in cancellation rates of product protection plans, which had improved its profitability.
The increase in profits came despite the company’s turnover falling by 9% to just over £1bn for the year. AO said this was a result of the company pivoting to focus on profit and cash generation and controlling overheads.
However, AO’s mobile arm, Mobile Phones Direct, continued to struggle, with new contracts down by 14% on last year. It said a suppressed market and greater competition for customers had led to it offering “unsustainable discounts to win market share”.
John Roberts, AO’s founder and chief executive, said: “We have made good progress on our profit performance … which is a testament to the success of our strategic pivot to focusing on profit and cash generation.
“We are now a much simpler, more efficient business and are performing better than ever for customers, with excellent and sustainable unit economics. “Our focus now is on delivering profitable top-line growth with an ambition for double-digit revenue growth in FY25.”
