AO returned to the black despite its revenue being slashed by over £60m during the first half of its financial year.
The Bolton-headquartered group has posted a pre-tax profit of £13.2m for the six months to September 30, 2023, compared to a loss of £11.6m during the same period in 2022. However, its revenue fell from £546.3m to £481.7m.
As a result, AO said it is upgrading its pre-tax profit guidance for its full year to between £28m and £33m. Sales in 2023-24 will remain lower, however, at around 10%, according to the group.
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Founder and chief executive John Roberts said: "I am very pleased with the clear progress that we are making as a result of our strategic pivot to focusing on profit and cash. We have generated more profit in the first half of this year than we did in the whole of last year, and are also upgrading our profit expectations for the remainder of FY24.
"As we anticipated, sales have reduced year on year as we continue to annualise the actions that we've taken to remove non-core channels and unprofitable sales from the business. However, we expect to end the year having returned to run rate revenue growth.
"Our core fundamentals are in great shape and our service to customers has never been better. Our Trustpilot scores continue to be the best in the market, our spontaneous brand awareness is at record levels, and our transacted customer base now stands at 11.6m people.
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"As ever, I'm grateful to our manufacturer partners for their continued support and of course to the fantastic AO team who continue to be magical in the moments that matter for customers while maintaining the discipline and focus needed to deliver our plan. We look forward with cautious optimism, given the macro challenges, as we turn our attention back to delivering profitable revenue growth to drive our operational gearing."
The company started its turnaround plan with a £40m fundraising round last summer in a bid to strengthen its balance sheet amid fears of a cash crunch. AO has since closed its loss-making German operation as part of the shake-up and has launched action to save at least £30 million a year by 2023-24.
The firm has also ditched unprofitable products while introducing delivery charges and cutting cashback incentives to reduce the cost of sales. As part of its overhaul, it made cuts in its workforce, particularly affecting senior and middle managers, while it also closed a number of offices and moved to remote working across some areas of the group.
Mr Roberts said the firm will begin reintroducing some of the smaller electrical items it stripped out over the next 12 months after changes in its supply chain to cut costs. Its bottom line has also been boosted by a drop in half-year warehousing costs to £25.5m from £31.3m a year ago.
The group's mobile business has been suffering as a result of falling sales as the spending squeeze hits that area hard, although Mr Roberts said he sees a "clear" path to profitability ahead. The results come after Mike Ashley's Frasers Group became AO’s biggest shareholder in the summer, with a 22.1% stake.
Mr Roberts said there are "things we're discussing" following the strategic partnership between the pair, but refused to be drawn on the talks and said they are in "no great rush to do anything".