Last checked at 9 Jun 2022 07:00
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.
9 June 2022
AO WORLD PLC
Conclusion of Strategic Review of the German business
AO World plc ("the Group" or "AO"), a leading online electricals retailer, today provides the following business update.
On 27 January 2022, the Group announced a strategic review of its German business as a result of material changes to the local trading environment which have significantly impacted the business over the past year. These included an intensifying competitive landscape, as customers have returned to pre-pandemic levels of online shopping, a substantial increase in digital marketing costs, and a constrained supply chain.
Having evaluated a range of strategic options during the review process, the Board has decided that closure of the German business is the best course of action. This decision was based on the continuing deterioration in the outlook for the German business, as well as the Board's responsibilities to shareholders and other stakeholders. The business will continue to trade for a brief period to facilitate a structured and orderly closure for its customers, suppliers and employees. The Board wishes to thank all the employees in AO's German business for their hard work and dedication since we launched the business in 2014.
The German business currently represents c. 10% of AO's total Group revenue. It is expected that its closure will incur cash costs of between nil and £15m.
AO will now increase its focus on its leading online position in the UK electricals market and optimising the Group's profit and cash generation potential. Given the strength and scale of the AO business model, its market-leading, consistently high levels of customer satisfaction, and the structural market trends towards online retailing, the Group continues to have confidence in both its strategy and its long-term prospects. Further details of strategic initiatives will be discussed at full year results.
Whilst remaining mindful of the uncertain macroeconomic context in the UK and the continuing global supply chain challenges, the Group's UK business continues to trade in line with the Board's expectations for FY23.
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AO World plc | Tel: +44 (0)7525 147 877 | ||||||||
John Roberts, Founder and Chief Executive | IR@AO.com | ||||||||
Mark Higgins, Group CFO | |||||||||
Cynthia Alers, Investor Relations Director | |||||||||
Powerscourt | Tel: +44 (0)20 7250 1446 | ||||||||
Rob Greening Nick Hayns Elizabeth Kittle | ao@powerscourt-group.com
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About AO AO World plc, headquartered in Bolton and a constituent of the FTSE Small Cap index, is a leading online electricals retailer in the UK. Our strategy is to create value by offering our customers brilliant customer service and making AO the destination for everything they need, in the simplest and easiest way, when buying electricals, including major and small domestic appliances and a growing range of mobile phones, AV, consumer electricals and laptops.
We deliver for our customers via our in-house logistics business and carefully selected third parties. We also provide ancillary services such as the installation of new products and recycling of old products as well as offering product protection plans and customer finance. AO Business serves the B2B market in the UK, providing electricals and installation services at scale. AO also has a majority equity stake in AO Recycling, a WEEE processing facility, allowing AO to ensure its customers' electronic waste is dealt with responsibly.
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Cautionary statement This announcement contains certain forward-looking statements (including beliefs or opinions) with respect to the operations, performance and financial condition of the Group. These statements are made in good faith and are based on current expectations or beliefs, as well as assumptions about future events. By their nature, future events and circumstances can cause results and developments to differ materially from those anticipated. Except as is required by the Listing Rules, Disclosure Guidance and Transparency Rules, MAR and applicable laws, no undertaking is given to update the forward-looking statements contained in this document, whether as a result of new information, future events or otherwise. Nothing in this document should be construed as a profit forecast or an invitation to deal in the securities of the Company. This announcement has been prepared for the Group as a whole and therefore gives greater emphasis to those matters which are significant to AO World plc and its subsidiary undertakings when viewed as a whole. ENDS | |||||||||