AO World – shares of the UK’s most trusted electrical retailer are just starting to move up again ahead of Finals due next month, now 99p TP 150p

16.05.2025

The shares of AO World (LON.AO.) are beginning to rise again ahead of the major electrical retailer announcing its Final Results for its year to end-March 2025.

We have already had guidance that the group’s results will show positively, while I believe that they could well show a confident view of the current trading year when the company releases its figures on Wednesday 18th June.

The Business

The Bolton-based group is the UK's most trusted major electrical retailer, with a 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 offers major and small domestic appliances and a growing range of mobile phones, AV, consumer electricals and laptops.

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.

Latest Trading Update

On Tuesday 25th March the group issued a Full-Year Pre-Close Trading Update for its 2025 year, guiding that the group had made profitable growth.

Group revenues are expected to have been 7% better at £1.1bn, while adjusted pre-tax profits grew some 30% to be close to the top end of its previously guided £39.0m to £44.0m range.

Impressively, it could well report some £20.0m of net funds at that year-end.

The company commented upon its Outlook by noting that its then-current momentum means that its B2C Retail business will deliver another year of double-digit revenue growth, and its 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.

Management Comment

Group CEO and Founder 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 Equity

There are some 580.3m shares in issue, some 52% of which are held by institutional investors.

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%), 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 (1.51%), and BlackRock Investment Management (1.05%).

Analyst Views

HSBC have a Buy out on the group’s shares with a 125p Target Price, while Jefferies have a 150p TP.

At Equity Development, its analysts Caroline Gulliver and Hannah Crowe have upgraded their ‘fair value’ for the group’s shares from 140p to 150p a share.

Their estimates for the year to end-March 2025 are for revenues of £1,133m (£1,039.3m), while adjusted pre-tax profits could be £43.0m (£34.3m), with earnings rising to 5.4p (4.1p) per share.

For the current year, they predict £1,294m sales, £45.0m profits, and 5.6p earnings.

The 2027 year they estimate, could see £1,424m sales, £59.2m of profits and some 7.4p of earnings.

In My View

It is now becoming obvious that this group’s pivot to profit is largely done while driving group margins higher for its profitable core upon which to base its future growth.

The shares, now at 99p, value the group at £574m and look ready to rise back up to trade the 120p region, perhaps helped by the good statement next month.