AO World PLC could shrink to exclude Germany

AO World PLC (LSE:AO.), which describes itself as a leading European online electricals retailer, could be about to become a bit less European as it considers withdrawing from Germany.

The company issued a trading statement on Thursday covering the first nine months of its financial year in which it revealed its German business is being significantly affected by several material changes to the local trading environment.

AO World said competition in the online market has intensified while shoppers who had turned to online retailers during the pandemic are returning to bricks & mortar retailers for their white goods. Meanwhile, supply remains constrained.

“We expect these trends will continue for the foreseeable future in the German market,” the retailer said, as it revealed it has started a strategic review of its German business, which will evaluate a range of options.

The nine months to the end of December 2021 saw group revenues up 58% on the same period two years earlier – i.e. pre-pandemic – but down 3% year-on-year.

The final quarter of the year saw revenues rise 45% on the same period of 2019 but fall 14% year-on-year.

UK revenues in the quarter were up 47% on a two-year comparison and down 12% year-on-year while revenues in Germany were up 35% and down 24% respectively.

Current trading estimates for the full year remain in line with the guidance set out in November, management said.

Shares in AO World were down 1.5% at 105.3p in late morning trading. A year ago, the shares would have set you back more than three quid.