AO World – are you AO-K? If not, perhaps you should be ahead of this week’s results, shares 95p, TP 150p

16.06.2025

This coming Wednesday morning will see AO World (LON:AO.) report its Final Results for the year to end-March 2025.

We have already seen guidance that the figures will show that the electricals retail group saw some 7% better revenues in the year to around £1.1bn, with adjusted pre-tax profits coming in some 30% improved at around £42m.

Management Comment

When announcing the latest Trading Update in late March, boss John Roberts stated that:

"Our strong performance shows that our model is working.

With a globally leading Trustpilot score of 4.9 from almost 750,000 reviews, and AO Five Star membership continuing to grow strongly, we're cementing our position as the most trusted electrical retailer and are increasing our frequency and share of wallet with customers.

AO is back to being a highly efficient growth machine; we are reaping the rewards from the execution of our strategy and 25 years of unwavering obsession with amazing customer service.

We're carrying good momentum into the new financial year and are pleased to be guiding to another year of double-digit revenue growth in our B2C Retail business, and for profits to keep growing faster than sales."

The Current Year To End-March 2026

Along with the Trading Update Roberts reiterated the current strength by stating that:

“Looking ahead to FY26, our current momentum means we expect our B2C Retail business will deliver another year of double-digit revenue growth and our other revenue categories to be broadly flat.

Despite the wider economic uncertainty and cost headwinds from the Government's budget we again expect adjusted PBT to continue to grow faster than sales.”

The Business

What started as a £1 bet in 1999 became AO, the UK’s most trusted major electrical retailer.

The £550m-capitalised Lostock, Bolton-based group has a declared mission to be the destination for electricals.

Its 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.

It sells over 7,000 different products on ao.com from major domestic appliances, small domestic appliances, audio visual equipment, computing, mobile, gaming to smart home technology.

The group also provides ancillary services such as the installation of new and collection of old products and offer product protection plans and customer finance.

The company’s AO Business side serves the B2B market in the UK, providing electricals and installation services at scale.

AO also has a WEEE (Waste Electrical and Electronic Equipment) processing facility, ensuring customers' electronic waste is dealt with responsibly.

The Equity

There are some 580.3m shares in issue.

Apart from the biggest shareholder being Mike Ashley’s Frasers Group with 25.01% of the equity, other larger holders include Camelot Capital Partners (20.41%), John Roberts, CEO, (16.40%), Phoenix Asset Management Partners (5.84%), Odey Asset Management (5.13%), Lancaster Investment Management (4.09%), The Vanguard Group (2.38%), Waystone Management (2.29%), Union Bancaire Privee (1.34%), and BlackRock Investment Management (1.03%).

Analyst Views

There are some six brokers following the group, five rating the shares as a Buy, while the sixth calls them a Hold.

Canaccord Genuity has upgraded the shares from Hold to a Buy, lifting its Target Price from 75p to 105p.

Peel Hunt has also upgraded its view to Buy (Hold), raising its Target Price from 115p to 137p.

The company’s Broker, Jefferies, rates the shares as a Buy with a Target of 150p.

At Equity Development, its analysts, Caroline Gulliver and Hannah Crowe, have upped their ‘Fair Value’ of the shares from 140p to 150p.

For the year to end-March 2025 they are estimating sales of £1,133m (£1,039m), with adjusted pre-tax profits of £43.0m (£34.3m), generating earnings of 5.4p (4.1p) per share.

For this current year they have pencilled in £1,294m revenues, £45.0m profits and 5.6p earnings.

The year to end-March 2027, they suggest, could return £1,423m turnover, £59.2m profits and 7.4p per share in earnings.

In My View

Despite the tricky retail climate, I do feel that AO World has a good story to tell and that its shares, now 95p, will respond well to positive news.

Furthermore, I do not rule out the possibility of Mike Ashley’s Frasers Group building up its stake even further, possibly ahead of making an outright bid.