Home » UK Business News » Successful cost-cutting plan leads to AO hiking earnings outlook for third time

Successful cost-cutting plan leads to AO hiking earnings outlook for third time

By Nagasunder in UK Business News, posted March 1, 2023

AO's cost-cutting plan has led to the company raising its annual earnings forecast for the third time in less than three months.

The Bolton-based online electricals giant said its "resilient" customer base has helped profitability improve more than expected as it continues to reduce costs.

AO said price increases across mobiles have also been slightly higher than forecast.

It anticipates underlying earnings of £37.5 million to £45 million for the full year, up from the £30 million to £40 million forecasted last month.

The company raised its earnings forecast in November and again in January, indicating that its cost-cutting strategy is working.

In a statement to the London Stock Exchange, AO said: "The steps we have taken to simplify the business and become more efficient have outperformed expectations and been delivered quicker than expected."

"Margin improvement initiatives coupled with a continued resilient underlying customer base has driven higher retail gross margins than previously expected and we anticipate that this will continue for the remaining five weeks of the financial year."

AO World posted a £12 million loss in the first half of the year, with shares plummeting last year following a string of profit warnings as the cost crisis impacted consumer spending on white goods, as well as labour shortages and supply chain disruption.

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Last summer, the company began its turnaround plan with a £40 million fundraising round in order to strengthen its balance sheet amid fears of a cash crunch.

Source: Business Live