Ao World Share Discussion Threads

[aim999] 08/12/2015 09:46

Better off with ASOS or BOOHOO. Boo is making good money and has a cash pile of 60m, growth is +35% which international is growing fast. Market cap is half this.. Makes no sense

[staverly] 08/12/2015 09:16

Interesting that Sequoia view this as good value at current levels - no wonder share price has shot up recently. Bill Ruane is a heavy hitter, not to mention the mighty Seth Klarman connection. But this little fish is not deterred, not least because it's not unheard of to find Jim Chanos on the other side of the deal to Warren Buffett.

[tim 3] 02/12/2015 00:02

Yep cash call would not surprise me they fleeced investors at the offering and will probably try for more imo.

[dlku] 01/12/2015 11:38

running out of cash here

[argylerich] 01/12/2015 11:33

MT agree with some of your sentiment regarding sales rather than profits, this lot do really echo Ocado in that respect. I'm not so sure about the cash call though, there's enough newly printed paperwork sloshing around out there to lend to even the riskier companies. Whether AO can afford debt and expansion at the same time is another matter.

[m.t.glass] 01/12/2015 10:51

ArgyleRich -- I'm sure they will soon shout about sales achieved this weekend, but it'll be just that. I'm pretty sure they won't throw in any mention of profits on those sales. It is pretty likely that sales achieved this weekend at low prices will have worsened their losses. As hpcg says, they may well make a cash call - in which case they will hope to boast this weekend's increase it turnover as something exciting - in order to pull in the cash before owning up to heavier losses.

[hpcg] 01/12/2015 10:13

tburley - 160 to 140 in a day for me; it doesn't get much better than that. As it is I agree with you, 160 or 170 is a much better opening. The risk of not being short is missing out on the capital raise they have to do. If they are sensible they'll get it away as soon as possible. The closer they get to running out of cash the worse the terms will be.

[argylerich] 01/12/2015 08:45

You don't think there will be any commentary on this weekend's sales?

[staverly] 30/11/2015 19:49

There's 43 days to next anticipated news flow, in the meanwhile don't see any point in providing a banal running commentary (either way) on the share price

[tburley] 30/11/2015 17:50

All you shorts have gone very quiet in the last few days. I could understand shorting this from £3.00 but opening a short at £1:40ish just seems plain foolish to me.

[m.t.glass] 26/11/2015 20:48

Black Friday (tomorrow)

"Online retailer AO World is offering up to £100 off washing machines, with prices starting from £179; more than 25 per cent off American fridge freezers, starting from £399, and up to 70 per cent off vacuum cleaners (from £49) and small appliances, including microwaves from £59." (city-am)


That should briefly help turnover - and increase losses.

[hpcg] 25/11/2015 13:28

tim 3 - exactly. A friend of mine was buying a washing machine earlier in the year. I said I'd used AO and JLP in the recent past, and my sister Amazon and they all gave the same good service so just go on price. I think she actually bought it from Curry's.

[tim 3] 25/11/2015 10:49

Problem is internet customer loyalty is virtually non existent so if something is cheaper at another major internet site that people trust ,Amazon for example people will buy there.

Think about it the first thing most people do is a search for price when buying online ,they may be wary about unknown sites but how many would pay more to buy from AO just because their delivery came on time with their last purchase?

This means they consistently have to be as cheap or cheaper than all the main online sites to get sales making it really hard to grow margins.

Look at amazon as an example they have massive turnover and are the number 1 etailer on the net yet they usually make a loss.

[staverly] 25/11/2015 09:30

MTG: Bloom sounds like an interesting guy. Bower's Ecclestone book is well worth a read though it does eventually become overly repetitive.

[m.t.glass] 25/11/2015 08:46

History repeating..

I am (just about!) old enough to remember another high-flying seller of appliances -




AO World listed 50 years after shares in John Bloom's appliance company collapsed into liquidation.

No connection, and no direct comparison. Just an interesting memory, of someone who revolutionised the marketing of appliances.

[m.t.glass] 25/11/2015 08:42

They might only have come to the market for money last year, but they've been in business for 15 years. And not comfortably into profit by now?

[staverly] 25/11/2015 08:31

IPO prospectus confirms France biggest potential market after Germany. France is 4x larger market than Netherlands ... marketing strategy seems odd.

Paying £20 million to greedy City advisers to raise £40m at IPO (bear in mind exiting shareholders footed their own bill of £17.5m)is excessive even by corporate gravy train standards. IMHO it's toast.

[m.t.glass] 25/11/2015 08:00

The Independent:
AO World continues to prioritise growth over profits

Investors’ patience with AO World is wearing thin as the online white goods retailer continues to prioritise growth over profits. AO plunged 23p to 140p as it swung to a first-half loss of £8m from a slight profit last year after heavy investment in marketing in the UK and Germany.

Revenues rose 22 per cent to £264.3m, but news that it is launching in the Netherlands in the spring sparked concerns that the company will remain loss-making for some time yet.

Start-ups breaking untrodden ground typically put growth ahead of profits – think Twitter for example – but 15-year-old AO World is trying to crack a market with plenty of established players able to replicate the online model.

The shares have slumped since the controversial float in February last year that valued it at £1.2bn, prompting its broker Jefferies to later admit the price was “punchy”.

[m.t.glass] 25/11/2015 07:52

from The Telegraph:


Sell AO World as shares slump on losses
The online retailer is barely making any profits despite soaring sales, says Questor

AO World [LON:AO], the online white goods retailer, slumped to a loss in the first-half sending the shares down by 15pc yesterday.
The concept of internet retailing is a nice idea. With no bricks and mortar and a low cost website the prices that can be offered beat many shop-based alternatives. Consumers should flock to the service in droves and once a dominant market position has been built up then prices can recover and the company can generate huge profits from its revenue base.
The theory is nice, but AO World is proving that the reality is somewhat different. Revenue is following the script, up 22pc to £264m in the six months to the end of September, but not much else. The company slumped to a first-half pre-tax loss of £8m, as it said the cost of expanding into Germany is proving painful

There are also worrying issues in the more mature UK business where operating profits slumped 60pc to £1.3m, on revenue of £249m, or a profit margin of half a percent.
Questor is not the only one to question the logic of this company. The shares more than halved in value this year and anyone who got involved when shares peaked at 412p on their first days trading in February last year is now nursing painful capital losses.
On top of that. there are a number of reasons why the shares could continue to fall.
Consensus forecasts estimate an adjusted pre-tax loss of £4.3m, from £596m in revenue for the year ended March. The company would need a remarkable reversal of fortunes during the crucial Christmas period to achieve those numbers.
The company is growing very fast, and profits could eventually begin to follow the sales, and rise.
However, Questor is concerned that it may take a long time to reach the profit tipping point and cash could get tight long before then. The company had net cash of £29.6m at the end of September, down from £44m at the same time last year.
We highlighted AO’s bubble valuation in April last year, and advised selling this time last year (217.3p, November 26) and that position remains. Questor would stay well away from the shares in this internet retailer as profits prove hard to come by. Sell.

[m.t.glass] 25/11/2015 07:39

Plenty of negative headlines among analysts. Albeit that some of them do buy into the bosses assurance that everything will come good in future years.

AO World's short term metrics are astronomical says Shore Capital
AO World's shares will likely come under pressure amid an "erratic" retail environment thus far in the third quarter and after the company posted larger than expected losses per share for the first six months of its financial year, Shore Capital said in a research note sent to clients.

Sell AO World as shares slump on losses
The online retailer is barely making any profits despite soaring sales, says Questor


AO World Swings To Loss As Investment Costs Amid Rising Revenue (Alliance News)

Online white goods retailer tumbled as European expansion and lower UK profits pushed it into the red. Overall sales were 22% higher at £264mln in the six months to September, but the group slipped from a profit of £0.9mln to losses of £8.9mln in the first half of the year. (ProactiveInvestors)


FTSE 250 movers: AO World's losses drive market down
AO World took the biggest hit after it swung to an interim loss, despite posting a sharp increase in first half revenue. In the six months to 30 September, the group reported a £8.9m operating loss compared with a profit of £0.9m in the corresponding period last year (Sharecast News)


AO World (LSE: AO) is having an even tougher period than Sainsbury’s, with the online seller of electrical goods today reporting a loss for the first half of the year, with the shares falling over 15% in morning trade as a result. A key reason for this is investment in Germany as well as other start-up costs, with a pretax loss of £8m being recorded versus a pretax profit of £0.8m in the first half of 2014.
Looking ahead, AO World has the potential to expand across Europe, with the Netherlands today being announced as a new territory in which AO will trade in future. This expansion is expected to lead to strong profit growth over the medium to long term but, while the company’s top line may be given a boost by an improved Christmas trading period, its shares trade on a P/E ratio of 185, which indicates that they are fully valued. (fool.co)

[m.t.glass] 25/11/2015 07:37

How fast can it expand without going bang?

AO World spends, spends, spends
AO World (AO.) boss John Roberts admits brand awareness was the white goods retailer's "biggest weakness" at the time of its IPO last year. But he also thinks it's the company's biggest opportunity as it ploughs cash into marketing at the expense of profits. "If I was our competitors," says Mr Roberts, "I wouldn't want us to grow".
In the first half, total UK revenues grew 15 per cent to £245m, while UK website sales increased by 24 per cent to £215m. But increased marketing spend, along with inefficiencies at the logistics and call-centre earlier in the year, led to a 30 per cent drop in adjusted cash profits to £5.1m. Mr Roberts admitted heavy marketing had driven top-line growth but "naturally" had a cost impact to the bottom line. However, he defended this long-term investment, which should help the company benefit from repeat purchases in the future.
Expanding into northern Europe - specifically Germany and soon, the Netherlands - is also proving costly. Losses of £9.6m overseas dragged group cash profits into the red compared with a profit of £7.3m this time last year.
Brokerage Numis expects losses of £11.9m for the year ending March 2016, which equates to a loss per share of 2.2p, compared with pre-tax profits of £1.6m and EPS of 0.29p in FY2015. (Investors Chronicle)

[dlku] 25/11/2015 00:29

yep, couldnt hack it :))