AO to close its German business
AO World has completed its strategic review of its German business and decided that closure is the best course of action.
The online electrical appliance retailer announced back in January that it would be conducting the review following changes to the trading environment in the country. AO had been facing challenges such as an increasingly competitive landscape as customers return to pre-pandemic levels of online shopping, as well as an uplift in digital marketing costs and a constrained supply chain.
Having evaluated a range of options during the review process, the company has now decided to close the business, although it will continue to trade for a brief period to facilitate a structured and orderly closure for customers, suppliers and employees.
In a statement AO said: “The board wishes to thank all the employees in AO’s German business for their hard work and dedication since we launched the business in 2014.”
The German business currently accounts for around 10% of AO’s total group revenue. AO expects to incur cash costs of between nil and £15 million following the closure.
The company will now be focusing on its online position in the UK electricals market and optimising profit and cash generation potential.
It added: “Given the strength and scale of the AO business model, its market-leading, consistently high levels of customer satisfaction , and the structural market trends towards online retailing, the Group continues to have confidence in both its strategy and its long-term prospects. Further details of strategic initiatives will be discussed at full year results.”
