June 6, 2017 / 8:10 AM / 6 months ago

AO World shares sink after warns of significant UK slowdown

(Reuters) - Britain’s AO World warned growth in its home market could slow “significantly” on Tuesday, as a wider full-year loss at the online retailer sparked a sharp share price fall.

AO World’s stock was the biggest percentage loser on the FTSE 250 midcap index, with shares in the white goods retailer falling as much as 10 percent to 130 pence, their lowest level since early July 2016.

“The challenging trading environment we saw in the UK in the second half of last year has continued into the start of our new financial year,” the company said in a statement.

AO World, which sells everything from washing machines and fridges to vacuum cleaners and TVs, said trading became more challenging in the second half of 2016. This was due to slowing consumer confidence after the Brexit vote, price inflation and a slowdown in UK housing market, it said.

Rising inflation and muted wage growth following Britain’s vote to leave the European Union last June is forcing many consumers to rein in their spending.

AO World had already warned that it is cautious about trading in Britain given the uncertain economic outlook, the impact of currency moves on supplier pricing and the possible effect on consumer demand.

AO World said group operating loss for the year ended March 31 widened to 12 million pounds ($15.5 million) from a loss of 10.6 million pounds a year earlier.

Revenue for the period rose to 701.2 million pounds from 599.2 million pounds a year earlier.

Website sales in the UK by rose 14.5 percent, pushing total UK revenue up by 12.7 percent.

($1 = 0.7723 pounds)

Reporting by Rahul B in Bengaluru, editing by Louise Heavens and Alexander Smith

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