Following today’s release of AO’s figures for the year ending 31 March 2025; Oliver Maddison, Retail Analyst at GlobalData, a leading data and analytics company, offers his view: “AO delivered on the high expectations which it previously set, continuing the trend from its H1 results to reveal double-digit business-to-consumer (B2C) revenue growth for its FY2024/25 and like-for-like (l-f-l) adjusted PBT growth of 31.8%* as it bounced back from the 8.7% revenue decline it recorded in its FY2023/24. This puts AO among the best-performing electricals retailers, outclassing Currys’ 4% l-f-l growth for the 53 weeks ending 3 May. AO maintained its momentum across both halves of the year, seeing 12.8% B2C growth in its H1 and 11.2% in its H2, also outpacing the 6.8% growth in tech sales that John Lewis & Partners experienced in its H2 to 25 January. Despite this, AO’s share price declined as these positive results had largely already been priced in, unlike the 39.9% decline in unadjusted PBT due to acquisition costs associated with the purchase of musicMagpie, as well as its poor performance in mobile.
“The retailer followed the trend of electricals sales being supplemented by services, highlighting its Five Star membership as a key driver of growth, as well as its AO Care offering. The membership system makes more sense for consumers now their discretionary incomes, especially among richer consumers, have begun to rise. This is also paying off for AO, with the share of orders from repeat customers (which it considers more cost-effective) rising to 60% from 54% the year prior. Nonetheless, AO’s range expansion beyond its traditional specialism in major kitchen appliances, thanks to implementing third-party warehousing, to categories such as drones and personal care electricals will help it enter new markets. The expansion into personal care will boost its growth potential among younger consumers, where it underperforms, and the purchase of musicMagpie gives the potential to make gains in the secondhand electricals market, again popular with the youth. Despite this, AO’s marketing strategy limits its cut-through among young people, with its advertising being focused on terrestrial TV where young people prefer streaming services, and the retailer highlighting ‘continued brand investment’ in areas such as postal mail brochures.
“Not all aspects of the business were rosy, however; its B2B sales declined by 10.5% and its mobile business fell by 11.2%, with both businesses struggling for profitability. AO is looking to review the viability of its ‘non-core’ sites such as mobilephonesdirect.co.uk and affordablemobiles.co.uk, warning that this may result in the decision to close the sites. While the market has been challenging, AO has not helped itself with its obscure branding in this category. AO also mentioned its intention to launch its own mobile carrier, in direct competition with Currys’ highly successful iD Mobile, which has the potential to support its underperforming sales in the category.”
