Confident AO announces move into Netherlands

A confident AO.com has announced plans to expand into the Netherlands in spring next year, despite the fact that its recent foray into Germany has already tipped the company into loss.

The internet retailer said it would nonetheless continue to invest in the German market.

The European operation recorded an operating loss of £10.2 million for the six months to September 30, mitigated slightly by profits in the UK of £1.3m, bringing the overall group loss down to £8.9m. Total sales increased 21.7 per on the same half-year in 2014 to £264.3m.

Last year, AO reported an overall operating profit of £0.9m and stated the loss this year was due to ongoing investment in German operations and start-up costs in further European territories. It expects a similar level of investment in the second half of its financial year.

AO said it had seen growth in its UK website sales, up 23.7 per cent to £214.8m and total UK revenue increased by 14.5 per cent to £248.6m.

“AO has made good progress in the first half, continuing to deliver on our long-term strategy,” said chief executive John Roberts. “In Germany, our first international market, we are continuing to build scale and remain confident that our business model and customer proposition are working as well on Mainland Europe as they have in the UK. Our confidence means that we are now ready to move into the Netherlands, helping to leverage our German asset, and we continue to review other adjacent markets.

“Looking ahead, it is clear that the momentum we built in the second quarter has set us up well for the full year. We remain as confident as ever that the market dynamics are moving in our favour as a pure-play digital operator in a market where customers continue to move rapidly online and our excellent service will only accelerate this. Against that backdrop we are well placed to deliver sustainable long-term growth.”