Ao.com has issued a profit warning as it predicts profits will be “slightly lower than anticipated”. Here’s the analysts’ view.
“Given the relatively low level of profitability currently being achieved by the group (including losses in Germany), this represents a material downgrade to estimates, and we expect the shares to open significantly lower.
“In our view, there is some uncertainty regarding the medium term UK growth rate at Ao and therefore an increased level of risk to our forecasts. Management now believes that earlier quarters benefitted from the extra publicity surrounding the IPO.” Georgina Johanan, research analyst at J. P. Morgan
“At the time of the Q3 trading statement the company expected to meet the market’s expectations, even taking into account the loss of a logistics contract, the cost impact of driver legislation changes and the adverse effects of Black Friday.
“These factors are also expected to impact the performance of the company in the next financial year. Visibility in online sales is always difficult, and having emerged relatively unscathed it seemed from all things ‘Black Friday’, revenue growth in Q4 15 has proven difficult.
“If we land on £470m, the £10m miss, a 2.1% shortfall arises from the compression of sales around Black Friday and a subsequent dislocation thereafter. Black Friday clearly hurts.” David Reynolds, equity analyst
“Ao.com says that although Germany is still going well, the UK has been tougher since Christmas. Funnily enough, we were going to mention that today is the anniversary of the first day of dealings in the Ao.com IPO last year. One person who will be feeling vindicated is Seb James of Dixons Carphone, who has always said that the valuation was crazy and the AO.com business model was suspect.” Nick Bubb, independent retail analyst
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