DAVY VIEW

Following the giddy heights of FY21 – +59% revenue growth to £1,661m, adjusted EBITDA £64m, a 4% margin and up 191% – it is perhaps inevitable that FY22 was going to be hard for AO World (AO). Continued COVID-inspired supply chain dislocation did not help, neither did the loose initial FY22 guidance. Two second-half profit warnings crushed expectations and AO finds itself, perhaps in familiar territory, needing to touch the bottom, rebuild trading momentum and meet or exceed consensus expectations. We retain our ‘Neutral’ rating with our price target reduced to 130p.