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Investing.com -- Ao World (LON:AO) shares jumped Tuesday after the British retailer said it expects full-year pretax profit for fiscal 2025 to grow faster than sales and reach the top end of its upgraded guidance, with momentum likely to carry into the next financial year.
The company’s shares were up 3% at 98.90p as of 09:26 GMT.
The online electricals retailer anticipates adjusted pretax profit—its preferred metric excluding one-offs—to rise by around 30%, hitting the upper end of its £39 million to £44 million range. That guidance has already been raised twice in the past year.
Retail revenue from the business-to-consumer segment is expected to grow about 12% year-on-year. On a like-for-like basis, total group revenue is seen rising roughly 7% to £1.1 billion.
Looking ahead to fiscal 2026, AO expects profit to continue outpacing revenue growth, even as cost pressures rise from higher wages and national insurance contributions. The core retail division is forecast to deliver double-digit growth, while other revenue lines are expected to remain stable.
"AO has now clearly demonstrated that it is back on track - profitability has been recovered and, supported by key initiatives, a sustainable growth trajectory has been re-established," Jefferies analysts said in a note.
With their 150p price target on the stock, the analysts said they "continue to see material upside" in AO.
Jefferies expects AO World to deliver around 10% growth in its B2C retail segment in fiscal 2026, supported by strong momentum and ongoing growth initiatives. With other revenue categories likely to remain flat, they forecast overall group revenue growth of approximately 7%.
AO also noted that its recent acquisition of musicMagpie, completed in December 2024, will contribute around £30 million in revenue to fiscal 2025, with minimal impact on profit.
Full-year results are due on June 18.