The boss of online electricals retailer AO World has warned customers of likely price rises to offset more than £8 million in extra wage costs due to budget measures.
AO World estimates its wage bill will go up by around £4 million due to the increase in employers’ national insurance contributions (NICs) and about another £4 million with next April’s minimum wage rise, for a cumulative £8m impact.
Founder and chief executive John Roberts told the PA news agency the group is likely to have to raise prices and make savings to mitigate the impact.
He confirmed “some of it will go into prices”, but said it is too early to say by how much and stressed the group will also look to use growth and efficiencies to counter the blow.
The warning comes despite the firm upgrading its full-year guidance this morning.
In the six months to 30 September 2024, group revenue increased by 6.3 per cent to £512.1m
B2C Retail revenue grew by 13 per cent, while gross profit, including product margins, services and delivery costs, increased by 10.6 per cent to £125m.
During the period, AO agreed to acquire musicMagpie and said the move will augment its “capability and value capture in the mobile and consumer technology categories as well as improving our ESG credentials”. Further investment was also made in its recycling facility.
The Bolton business now expects adjusted profit before tax of between £39m and £44m, alongside group revenues of between £1.09bn to £1.13bn with growth of more than 10 per cent in B2C Retail
Founder and chief executive John Roberts said: “I’m delighted to report another successful six months for AO during which our main B2C Retail business has returned to double digit growth alongside making more progress towards our medium-term ambition of delivering a PBT margin of over 5 per cent.
“We’ve had a Morecambe and Wise summer sales period; all the right volumes just not in the right categories. The wet summer weather meant we sold fewer fridges and air conditioning units and more tumble driers than we had planned. Overall, our team did a fantastic job to play this out as a satisfying score draw.
He added: “Our laser focus on costs and efficiency remains which ensures, as planned, that profit grew faster than sales on the growth we’ve delivered.”
