AO World addresses potential price rises due to increased wage costs resulting from budget changes.
- The company anticipates an additional £8 million in wage expenses due to higher NICs and minimum wage hikes.
- AO’s CEO, John Roberts, suggests prices might rise and cost efficiencies will be sought.
- Despite rising costs, AO reports significant revenue growth and upgrades its profit forecast.
- Investments in growth, including acquisitions and recycling, remain a focus for AO.
AO World is responding to recent budget measures that are set to elevate wage costs by more than £8 million, a move prompted by enhanced national insurance contributions and a scheduled minimum wage rise. These developments signal a challenging financial landscape for the online electricals retailer.
CEO John Roberts has communicated to the PA news agency that the company will likely increase prices as a countermeasure against these escalating costs. However, the exact scale of the price hikes remains undetermined. Roberts emphasises that alongside elevating prices, AO will intensify its efforts to achieve cost efficiencies and leverage business growth to offset financial impacts.
The firm’s proactive approach comes even as it has upgraded its full-year financial outlook. AO reported a 6.3 per cent rise in group revenue over the six months leading to 30 September 2024. This growth is mirrored in the B2C retail segment, which saw a 13 per cent surge, pushing gross profits up by 10.6 per cent to £125 million.
As part of its expansion strategy, AO has acquired musicMagpie, aiming to enhance its capabilities in the mobile and consumer technology sectors and bolster its environmental, social, and governance (ESG) credentials. Additionally, the company is investing in recycling facilities to further solidify its sustainable operations.
Looking ahead, AO anticipates a pre-tax profit between £39 million and £44 million, with expected group revenues ranging from £1.09 billion to £1.13 billion. The company aims for over 10 per cent growth in its B2C retail operations. CEO Roberts described the recent sales period as a ‘Morecambe and Wise summer’, noting the impact of atypical weather on sales distribution but commending the team’s adaptability in managing unexpected sales patterns.
Roberts concludes by affirming AO’s commitment to focus on cost efficiency, which has allowed profit growth to outpace sales increases.
Despite financial pressures, AO World remains focused on growth and efficiency.
