AO World (LON: AO.) shares gained in early Tuesday trading after the company said in a trading update that the actions taken to reduce costs and improve margins are gaining traction.
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Since the start of AO World’s current financial year, it has been focused on profitability, prioritising more profitable cash-generative sales and reducing costs.
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As a result, the electrical retailer said profitability is now running ahead of its previous expectations, and it now expects full-year adjusted EBITDA to be in a range of £30m to £40m, above its prior guidance of £20 million to £30 million given in November.
AO World shares jumped following the update on Tuesday, currently trading just under 4% higher at 72.35p. At the open, the stock hit a high of 81.9p per share.
The company went on to state that its UK revenue continues to be in line with expectations, decreasing by 17.2% compared to last year’s period.
“We remain cautiously optimistic and yet mindful of the continuing macroeconomic uncertainty and tough consumer environment,” the company said in its statement. It added that it is also taking into account the extent to which the macro headwinds and inflationary pressures can impact its contract assets.
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