Online electrical chain AO World has added to the gloom in the retail sector this morning, with an underwhelming set of results.
AO World, which sells domestic appliances as well as computers, has warned the City that sales will slow “significantly” between April and June, its first quarter. It said the tough trading environment in the UK that hit sales in the second half of last year had continued into its new financial year.
Its operating loss for the year to 31 March widened to £12m from £10.6m, as a £15.6m profit in the UK was offset by losses in Germany and the Netherlands.
The company was founded in 2000 by John Roberts, a former kitchen salesman, who ran the business as chief executive until February. When it floated on the stock market three years ago the shares soared – but soon dipped below the 285p offer price.
They are now worth just 136p, after tumbling by 6% in early trading today.
Brushing aside the difficulties, the new chief executive Steve Caunce said:
“We remain relentless in pursuing our goal to be the best electrical retailer in Europe.”
The agenda: UK retail sales slide as inflation rises
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
With two days to go until the UK general election, we have new evidence that parts of Britain’s economy are slowing.
UK retail sales shrank by 0.4% in May, according to the latest healthcheck from the British Retail Consortium. The report found that households are cutting back as rising inflation hits them in the pocket.
Worryingly, people have less to spend on discretionary items once they’ve covered essentials such as food.
Online sales — typically a big growth area — also slowed. They only rose by 4.3% during the month, compared to over 13% a year ago.
Paul Martin, UK head of retail at KPMG, said many shoppers are now suffering from falling real wages, leaving them less to spend in the shops.
“The impact of inflationary pressures on the nation’s purse continues to play out in this month’s figures, with shoppers evidently spending more on food and drink than on non-food purchases.
“With inflation continuing to rise and wage growth stagnating, consumers are starting to feel the pinch – although the highly competitive nature of the UK grocery market continues to play out in the consumer’s favour.
Here’s Katie Allen’s full report:
That’s set the tone for a rather subdued day, with many stock markets in Asia dipping and the US dollar coming under pressure.
Holger Zschaepitz (@Schuldensuehner)
Good morning! Asia stocks drop as caution reigns. #Dollar hits 7mth low in wake of soft econ data. #Oil extends decline on Mideast tensions. pic.twitter.com/kLxBR99bFX
