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Electrical-appliance retailer AO World reported wider pre-tax losses as narrowing gross margins and increasing cost pressures from re-configuring driver scheduling arrangements in Germany offset stronger performance in the UK.
For the year ended 31 March, pre-tax losses widened to £18.9m from £13.5m a year earlier, while revenue increased 3.3% to £902.5m.
Adjusted underlying losses (LBITDA) met guidance given April, narrowing to £0.4m from £3.4m a year earlier.
Total UK revenue was up 10.1% to £749.3m, and Europe revenue increased by 32.2% on a constant currency basis to €173.3m, but overall performance was hampered somewhat by 'driver challenges in Germany and a lack of real improvement in product margin and customer acquisition costs,' the company said.
Gross margin for the group fell to 17.0% for the year, down 0.8% against the prior year, with total gross profit increasing by 7.5% to £152.3m.
Looking ahead, the company said its ambition remained to be run-rate profitable in Europe during 2021. 'We have a number of initiatives in place across four key measures; customer service, revenue growth, gross margin and cost to deliver that are currently being actioned,' it added.
'We've delivered double digit revenue growth in the UK and achieved over 30% in Europe and Adjusted EBITDA in the UK has improved by over 20%. The UK result was achieved against an ongoing tough trading environment and includes three months contribution from Mobile Phones Direct which we acquired in December 2018 and its integration continues to go to plan,' said John Roberts, AO Founder and Chief Executive Officer.
'Overall, the AO team deserve praise for their efforts in FY19 but we can do better and I'm pleased with the progress that we are now making in the first few months of this financial year.'