Bolton-based electrical retailer AO World plc reported a dip in annual sales as the cost-of-living crisis ate into consumers’ spending, but its profit rose due to cuts in warehousing and some administrative expenses.

The company said revenue fell 9% to £1.039 billion, while operating profit nearly trebled to £36.2 million for the financial year ended March 31. 

Its shares rose 4% on the London Stock Exchange. 

AO’s Founder and Chief Executive, John Roberts, said: “We have made good progress on our profit performance in FY24, which is a testament to the success of our strategic pivot to focusing on profit and cash generation. Our focus now is on delivering profitable top line growth with an ambition for double digit revenue growth in FY25.”

Looking forward, the company said: “Despite the ongoing macro-economic challenges our objectives remain unchanged and we are confident in our ability to deliver on our ambition for double digit revenue growth in FY25 alongside adjusted PBT of £36m to £41m. We reiterate our medium-term guidance of adjusted PBT margin of 5%, double digit growth and EPS growing faster than revenue.”

Richard Hunter, Head of Markets at interactive investor, said: “AO World’s strategic and decisive actions to focus on profit and cash generation are now fully washing through, after the group reshaped its business model.”

“In particular, the previous decisions to exit the German business, and remove its non-core channels and loss-making sales were difficult but necessary actions. To add to the challenge, these were compounded by a weakening of consumer sentiment, as well as a slight shift away from online purchases as customers reverted to physical shopping, as evidenced by many retailers over recent months.”

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “It’s been a volatile ride for the company and its shareholders over the past few years, after lockdowns saw demand surge for electrical goods and then pull back as it became clear that many customers had simply brought forward purchases.”

“It’s also been hit by the cost-of-living crisis with shoppers spending more cautiously. It’s now back at a more even keel, with more promising growth prospects ahead, helped by its razor-sharp focus on keeping high levels of customer satisfaction, particularly through its one-stop delivery and installation services.  It’ll be very much reliant on the recovery in UK economic growth and consumer confidence.”