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Mike Ashley's Frasers has bought 22.2% AO stake
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Frasers has not asked for seat on AO board
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AO core profit recovers to 45 mln stg
LONDON, July 5 (Reuters) - British online electricals retailer AO World will likely develop "commercial opportunities" with Mike Ashley's Frasers Group after the two companies forged a strategic alliance last month, AO's boss said on Wednesday.
Sportswear and fashion retailer Frasers, formerly called Sports Direct, has also amassed a 22.2% stake in AO, making it the biggest shareholder of the seller of cookers, fridges and washing machines.
"That doesn't necessarily mean that the commercial opportunities will happen but logic says it makes them more likely to happen and if they do happen then he (Ashley) wins on both sides," AO founder and CEO John Roberts told Reuters in an interview.
He noted that Frasers owns Studio Retail which also sells electricals, while AO has a well regarded home delivery operation.
However, selling AO products in Frasers' stores is not being discussed, with AO having closed a store based initiative with Tesco over the last year.
"I'm not in any hurry to try that again anywhere else," said Roberts.
He said Frasers has not asked for a seat on AO's board.
AO's profit recovered in its 2022-23 year as it benefited from a plan to reduce costs and improve margins
The group made adjusted core earnings, or EBITDA, of 45 million pounds ($57.2 million) in the year to March 31, in line with guidance and up from 23 million pounds in 2021-22.
While revenue fell 17% to 1.14 billion pounds, Roberts said the UK consumer was showing resilience.
AO, whose shares have increased 54% so far this year, made an EBITDA margin of 4%. It said it was confident of delivering on its 5% EBITDA margin ambition in the short term and returning to top line growth in the medium term.
Currys, Britain’s biggest electricals retailer, will report annual results on Thursday.
Frasers has also recently built a 10.4% stake in Currys and says it is a "supportive" holder.
Roberts also said he was not concerned about any fallout on the electricals market from China putting export controls on gallium and germanium products.
