Online white goods retailer AO World is poised to announce a surge in profits, bolstered by its growth strategy that has led to stronger sales.
The firm has been on a path of gradual recovery over the past three years, following a spike in losses in 2022 due to the fallout from the Covid pandemic.
AO World is anticipated to present another year of enhanced performance when it discloses its annual results on Wednesday, June 18.
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Expectations are set for the Bolton-based group to report an approximate 30% rise in underlying pre-tax profits, potentially reaching up to £44 million for the year ending March.
Additionally, the company is predicted to disclose a roughly 7% increase in like-for-like sales for the year.
Peel Hunt analysts forecast that the retailer will achieve sales totalling £1.11 billion for the year.
In its last update in March, AO World indicated that consumer demand remained "robust" in spite of many households grappling with higher mortgage repayments and energy costs.
Investors are eager to learn about the group's prospects for the forthcoming financial year, especially as it faces elevated expenses due to hikes in the minimum wage and national insurance contributions.
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AO World had previously noted that expected cost increases in April would result in approximately £8 million in additional expenses for the company.
Nevertheless, analysts suggest that profit growth is likely to persist despite these increased costs, with the group's expanding membership scheme seen as a key driver for accelerating sales.
Peel Hunt analyst John Stevenson said: "AO's membership scheme is the glue that binds the group's widening capabilities across finance, mobile and pre-owned, and introduces MDA (major domestic appliance) customers to the full range of AO's non-MDA products.
"Get membership right and we believe AO can double its electricals market share, delivering 2.5 times current revenue and five times profit over 10 years, with sliding scale in between.
"The early developments of membership are showing good traction."
Interest is also growing among investors regarding AO's approach to integrating the Music Magpie business it acquired last year for a sum close to £10 million.
John Roberts, AO World founder and chief executive, emphasised the importance of acquiring a "top-tier trade-in service" describing it as "essential" for the group’s ambitions.
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Market analyst Michael Hewson, from MCH Market Insights, said: "The acquisition of Music Magpie is expected to add £30 million of revenue, adding a modest loss into the full-year results.
"There should be greater clarity on how much this is likely to be with the risk of a potential impairment of up to £22 million."