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(Alliance News) - AO World PLC on Thursday revealed a swing to annual loss as it now looks to a year of "realignment for the business".
Shares were up 11% at 44.68 pence each on Thursday morning in London.
The online retailer of white goods said revenue in the year to March 31 fell 6.3% to GBP1.56 billion from GBP1.66 billion. AO swung to a pretax loss of GBP37.2 million from a GBP20.2 million profit.
AO World said shortages in "key product components and driver availability in H1 impacted on our ability to deliver traditional full product range and delivery proposition".
Adjusted earnings before interest, tax, depreciation and amortisation of GBP8.5 million was down sharply from GBP64.4 million the year before, which the firm blamed on increased staff costs as well as higher marketing and logistics expenses.
Administrative expenses rose 15% to GBP302.3 million from GBP263.6 million the year before.
"The new financial year marks a period of realignment for the business as we execute a strategic pivot to focus on cash and profit generation," AO said.
Pressure on AO World has grown in recent months. In late-April, shares were hit when the company warned about supply chain issues and a squeeze on consumer incomes.
In July, it issued a statement on its liquidity position, after a report from the Sunday Times that a credit insurer cut its cover for the online retailer's suppliers. Credit cover is a crucial aspect of the retail supply chain. It provides cover for firms should customers not pay debts in time or at all. Without cover, suppliers would usually require upfront payments to be made.
AO has also recently closed its German operation, after kicking off a strategic review of the unit earlier this year.
Chief Executive John Roberts said: "The past 12 months has been a turbulent time for business and for retail in particular, and AO hasn't been immune to those effects. Looking ahead, we certainly have more volatility to navigate, but the core fundamentals of our business remain strong. We entered the new financial year with a period of strategic realignment, and a focus on cash and profit generation."
In the short-term, the company said its "strategic pivot" will reduce both sales and costs, but eyes average revenue growth in excess of 10% per year in the medium-term.
For the 2023 financial year, it expects revenue between GBP1 billion and GBP1.25 billion. Adjusted earnings before interest, tax, depreciation and amortisation are expected around GBP20 million to GBP30 million - which would be up significantly on the 2022 financial year.
By Xindi Wei; xindiwei@alliancenews.com
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