REG - AO World plc - Conclusion of Strategic Review of German Business

AO WorldAnnouncement

09/06/2022 07:00

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RNS Number : 2340O  AO World plc  09 June 2022

This announcement contains inside information for the purposes of Article 7
of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic
law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR. Upon the publication of this announcement via the Regulatory Information
Service, this inside information is now considered to be in the public domain.

 

 

9 June 2022

 

AO WORLD PLC

Conclusion of Strategic Review of the German business

 

AO World plc ("the Group" or "AO"), a leading online electricals retailer,
today provides the following business update.

On 27 January 2022, the Group announced a strategic review of its German
business as a result of material changes to the local trading environment
which have significantly impacted the business over the past year. These
included an intensifying competitive landscape, as customers have returned to
pre-pandemic levels of online shopping, a substantial increase in digital
marketing costs, and a constrained supply chain.

Having evaluated a range of strategic options during the review process, the
Board has decided that closure of the German business is the best course of
action.  This decision was based on the continuing deterioration in the
outlook for the German business, as well as the Board's responsibilities to
shareholders and other stakeholders. The business will continue to trade for a
brief period to facilitate a structured and orderly closure for its customers,
suppliers and employees.  The Board wishes to thank all the employees in AO's
German business for their hard work and dedication since we launched the
business in 2014.

 

The German business currently represents c. 10% of AO's total Group revenue.
It is expected that its closure will incur cash costs of between nil and
£15m.

 

AO will now increase its focus on its leading online position in the UK
electricals market and  optimising the Group's profit and cash generation
potential.  Given the strength and scale of the AO business model, its
market-leading, consistently high levels of customer satisfaction, and the
structural market trends towards online retailing, the Group continues to have
confidence in both its strategy and its long-term prospects. Further details
of strategic initiatives will be discussed at full year results.

 

Whilst remaining mindful of the uncertain macroeconomic context in the UK and
the continuing global supply chain challenges, the Group's UK business
continues to trade in line with the Board's expectations for FY23.

 

 Enquiries

 AO World plc                                          Tel: +44 (0)7525 147 877
 John Roberts, Founder and Chief Executive             IR@AO.com (mailto:IR@AO.com)
 Mark Higgins, Group CFO
 Cynthia Alers, Investor Relations Director

 Powerscourt                                           Tel: +44 (0)20 7250 1446
 Rob Greening                                          ao@powerscourt-group.com (mailto:ao@powerscourt-group.com)

 Nick Hayns

 Elizabeth Kittle

 About AO

 AO World plc, headquartered in Bolton and a constituent of the FTSE Small
 Cap index, is a leading online electricals retailer in the UK.  Our strategy
 is to create value by offering our customers brilliant customer service and
 making AO the destination for everything they need, in the simplest and
 easiest way, when buying electricals,  including major and small domestic
 appliances and a growing range of mobile phones, AV, consumer electricals and
 laptops.

 We deliver for our customers via our in-house logistics business and carefully
 selected third parties. We also provide ancillary services such as the
 installation of new products and recycling of old products as well as offering
 product protection plans and customer finance.  AO Business serves the B2B
 market in the UK, providing electricals and installation services at scale.
 AO also has a majority equity stake in AO Recycling, a WEEE processing
 facility, allowing AO to ensure its customers' electronic waste is dealt with
 responsibly.

 Cautionary statement

 This announcement contains certain forward-looking statements (including
 beliefs or opinions) with respect to the operations, performance and financial
 condition of the Group. These statements are made in good faith and are based
 on current expectations or beliefs, as well as assumptions about future
 events. By their nature, future events and circumstances can cause results and
 developments to differ materially from those anticipated. Except as is
 required by the Listing Rules, Disclosure Guidance and Transparency Rules, MAR
 and applicable laws, no undertaking is given to update the forward-looking
 statements contained in this document, whether as a result of new information,
 future events or otherwise. Nothing in this document should be construed as a
 profit forecast or an invitation to deal in the securities of the Company.
 This announcement has been prepared for the Group as a whole and therefore
 gives greater emphasis to those matters which are significant to AO World plc
 and its subsidiary undertakings when viewed as a whole.

 ENDS

 

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