AO World launches share buyback as profitability strategy pays off

Shares in AO World surged over ten per cent after the online electricals retailer announced an ambitious share buyback programme and raised its profit outlook, marking a significant milestone in its ongoing turnaround strategy.

The Bolton-based company, known for its range of white goods and household appliances, revealed plans to repurchase up to £10 million of its shares—a first for the group. AO World now expects full-year profits to reach between £45 million and £50 million, aligning with the upper end of its previous guidance and exceeding last year’s profit of £45 million, which did not include the recent £35 million acquisition of MusicMagpie.

Group revenues for the six months to 30 September are on track to be thirteen per cent higher, with retail revenues anticipated to rise by eleven per cent. This robust performance comes amid a streamlined operational focus on profit and cash generation, which AO credits for making the business simpler and more efficient.

Founder John Roberts, who started AO in 2000, expressed confidence in the company’s strategy, highlighting an “exciting pipeline” for delivering additional value to customers during the second half of the year. Despite today’s boost, AO shares remain fifteen per cent lower than a year ago, reflecting a broader sector downturn following the post-pandemic online shopping surge.

Earlier this year, Roberts indicated AO could close its underperforming contract mobile phone business should it fail to secure better terms from network providers. The challenging market, driven by drops in customer demand and stagnant handset innovation, saw a thirteen per cent market decline. No updates on this division have yet been made public.

In its summer update, AO also outlined cost-cutting plans, leveraging artificial intelligence and offshoring to absorb an estimated £8 million rise in annual costs from increased national insurance contributions and minimum wage rates. While AO has signalled continued recruitment, some new roles are expected to be based overseas.

Roberts has called on the government to address the influx of cheap and potentially unsafe electrical goods from Chinese competitors, urging greater enforcement to protect UK consumers and fair market conditions. He echoes the concerns of Currys chief executive Alex Baldock on this issue, pressing for action to prevent unfair competition from third-party online sellers