Bolton electrical retailer AO has upgraded its full-year earnings guidance, saying it is “cautiously optimistic” in an unscheduled trading update to investors.
The company upgraded its full-year earnings forecast, despite the likely impact of the cost-of-living crisis on sales of big-ticket items such as electrical goods. It said it expected full-year earnings before interest, tax, depreciation and amortisation to be in the region of £30-40m, from £20-30m in its most recent full-year filing covering the period to March 31, 2022.
The company added that the improved outlook was thanks to “actions taken by the business to reduce costs and improve margins” as revenue growth in the three months to December 31 were down 17 per cent on Q4 2021, although in line with forecasts.
These actions included the sale of AO’s loss-making German arm, a shift to focusing on profit over sakes growth, and a management restructuring. They were aimed at saving around £30m annually.
AO shares were up around five per cent on Tuesday morning following the update.
