AO World offshores sales and customer contact roles in face of soaring wage bill

Dan Coatsworth, head of markets at AJ Bell, said: “Online electronics retailer AO was not exactly in ‘AO, let’s go’ mode after its results were overshadowed by warnings about cost pressures and an uncertain economic outlook.

“During the pandemic the business was operating like a washing machine at top speed and this resulted in screws coming loose, leaving it on the market scrap heap in the post-Covid cost-of-living crisis.

“The repair job has been a painstaking one as profit has slowly been rebuilt by cutting costs and exiting underperforming parts of the business, while the balance sheet has also been fixed.

“AO surprised investors with its takeover of electronics and computer games second hand platform MusicMagpie in 2025 – a loss-making operation seen as a distraction from the company’s recovery efforts.

“However, full-year results show AO has addressed the losses the acquired business had chalked up.

“More broadly, group profit has bounced back strongly, and AO has kept a handle on costs by offshoring some of its functions in customer relations and sales as well as using more automation in its logistics.

“A £20million return of capital to shareholders, split between a special dividend and share buyback, is a reward for shareholders’ patience.

“The negative reaction to the results reflects lingering concerns about the impact of low consumer confidence on appetite for big-ticket appliances despite AO World sticking with guidance for the current year.

“The latest UK inflation reading and the implication it has for interest rates is positive for AO, but investors remain cautious judging by the negative share price reaction.”