Online retailer warns of “challenging” UK trading conditions

AO World, the online domestic appliance retailer, has warned British businesses of a significant slowdown in the UK economy following a sharp fall in the company’s own shares.

Its most recent trading report shows that AO losses increased from £10.7 million to £12 million, sending its shares tumbling 11 per cent to 128p.

John Roberts, AO founder, said the firm had experienced “challenging” UK trading conditions, spurred by weaker consumer confidence, increasing inflation and a slowdown in the housing market.

Last year, the firm intensified its expansion in EU regions, driving significant investment into a new regional distribution centre in Bergheim, Germany.

Steve Caunce, the firm’s new CEO, said he expected the business to make a loss at this stage as it reinvests its UK profits into the European business.

Neil Wilson, of ETX Capital, said: “It’s tough shifting fridges and big-screen TVs. Without slashing prices, and destroying margins in the process, customers can go just about anywhere.

“There are similarities between AO World and Ocado. Like the grocery pick-and-pack specialist AO World is growing sales impressively but finding it hard to turn a profit.”