AO World, the fast-growing but lossmaking online electrical appliances retailer, said it had raised £50m from a share issue to fund its expansion in Europe.
AO, whose share price has more than halved from its 2014 float price and fallen by 22 per cent in the past year, said the new stock had been sold at 133p. It represented 9 per cent of existing shares.
Steve Caunce, who was promoted to chief executive last month and who bought £2m of the shares, said the cash would be used to fund AO’s expansion in Europe. “The proceeds will support our continued growth and increasing scale,” he said.
In a separate trading update, the company ruled out earning a profit during this financial year, which runs to the end of March.
It said adjusted losses before interest, tax, depreciation and amortisation would be between zero and £2.4m. In November it forecast this figure would be between a loss of £2.4m and a profit of £4.7m.
But the company added that revenue would be at the bottom of the range it forecast last year, at about £700m, which would be a 17 per cent rise on a year earlier.
AO’s shares were up by 3.3 per cent to 142.5p at lunchtime on Thursday.
The group said it planned to continue spending profits from the UK business to fund its expansion in Europe, where revenues are about a ninth of what they are in Britain. It aims to cut out intermediaries such as distributors to gain an edge in customer service by speeding up delivery times to a day or less.
AO has been investing heavily in replicating its model in Germany and the Netherlands, and recently opened a distribution centre in Bergheim, which is near Cologne and the Dutch border.
George Mensah at Shore Capital said the trading statement was disappointing because the results were below its expectations and towards the bottom end of guidance.
He said AO faced pressure from a potential softening of the electricals market in the UK and price rises being pushed by suppliers — and noted the guidance that profitability in Germany and the Netherlands would not be achieved until 2021.
John Roberts, who has stepped aside as chief executive after founding the business 17 years ago but who remains on the board as “executive director”, also bought £2m of the shares. Mr Roberts and Mr Caunce held 38 per cent of the shares at the start of the year, according to S&P Capital IQ.
Numis and Jefferies are acting as bookrunners and Rothschild is advising AO on the placement.
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