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AO.com reports Black Friday success

Electricals retailer AO.com’s parent company AO World today (11 January) said that group revenue was up by 8.2% year on year in three months to 31 December 2018.

UK revenue was up by 4.4% and Europe increased by 31.3%, with the business reporting its highest ever sales month in November 2018 – aided by what it deemed to be a successful Black Friday trading period.

In its third-quarter statement, AO said this relatively new peak trading period for UK retail continues to be popular with its customers – and in 2018, its Black Friday deals were run over a longer time period in November. It described the sales flow as smoother than last year and reported an improvement in margins.

The revenue figures in this announcement exclude the performance of Mobile Phones Direct, which AO completed the acquisition of on 17 December 2018.

AO World CEO Steve Caunce said: "Against a challenging backdrop, Q3 represents a solid performance across the AO Group. 

“We are on track with our plans as we continue to provide a great proposition for our customers. I am particularly proud of the hard work of the teams in the UK and Europe in this critical trading period which saw a record numbers of customers choose AO for their Black Friday and seasonal electricals purchases."

But the addition of Black Friday to the UK retail calendar has not been positive for other businesses, with several retailers reporting lower than expected margins as a result of heavy discounting in the industry's so-called golden quarter.

Moss Bros, for example, which also offered a trading update today – for the 23 weeks to 5 January 2019 – said total sales improved year on year, but cautioned that the period post Black Friday required deeper discounting than planned.

The retailer said this discounting was necessary in order to remain competitive, and it impacted gross margins, which fell by around 2.6% compared to the same period in 2017.

Brian Brick, CEO of Moss Bros, commented: “As I noted at the time of our interim results in September, we had already seen more intensive discounting from our competitors and this has continued throughout the period.

“Having originally sought to resist discounting pressures, we too have found the need to adopt a more tactical, discount-led pricing stance across all retail channels. Whilst this proved successful in delivering top-line sales growth, there has been an expected negative impact on gross margin rates, which ensured that the group managed the level of terminal stock."

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