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UK’s AO World raises outlook after return to profit

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A sign of AO is pictured outside the distribution centre in Crewe, Cheshire, Britain November 24, 2020. REUTERS/Carl Recine/File Photo Acquire Licensing Rights

LONDON, Nov 21 (Reuters) – British online consumer electricals retailer AO World raised its expectations for the full year after returning to profit in the first half as reduced costs and improved margins offset a fall in sales in a tough market for discretionary spending.

In the UK, though inflation is falling, borrowing costs are high, the housing market is slowing and there is pressure on so called big-ticket expenditure.

AO (AO.L), a seller of washing machines, fridge freezers, cookers, TVs and laptops said on Tuesday it made a pretax profit of 13 million pounds ($16.20 million) in the six months to Sept. 30, versus a loss of 12 million pounds in the same period last year, despite a 12% fall in revenue to 482 million pounds.

For its full 2023/24 year it forecast a pretax profit of 28 million pounds to 33 million pounds, up from previous guidance of around 28 million pounds. It expects full year revenue to fall around 10%.

“We will continue to invest prudently in the business and seize the significant market opportunities that we see in front of us,” the group said.

In June, Mike Ashley’s Frasers (FRAS.L) sportswear and fashion group forged a strategic partnership with AO after becoming its biggest shareholder. Frasers currently holds 22.1% of AO.

AO shares are up 60% so far this year.

($1 = 0.8025 pounds)

Reporting by James Davey; Editing by Kate Holton and Sarah Young

Our Standards: The Thomson Reuters Trust Principles.

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