Shares in online appliance retailer AO World – which lost nearly half their value following a profits warning in February – fell further on news of the sale of a £10m stake by non-executive chairman Richard Rose.
Rose sold over 5.5-million shares at 180p each, representing a 1.3% stake in the company, on 13 March. At one point on 16 March, shares in the Bolton-based business fell to 175p – down from a peak of over 412p following its stock market flotation in February 2014.
The flotation valued AO at £1.2bn, despite having profits of less than £8m the year before. Last month, the company said that it expected to have sales of around £470m-£475m in the year to 31 March 2015.
The profit warning came after the company said its Black Friday sales had condensed revenues into a shorter period and had not led to additional income. It estimated pre-tax profits for this year at £16.5m, £2m lower than a previous forecast.
Rose retains around 720,000 shares in AO and he was said by CEO John Roberts to remain “committed to the company”. Roberts added: “The share sale by Richard Rose follows the expiry of the post-initial public offering lock-up and will help to further increase liquidity and the number of shares in public hands.”
News of the latest share plummet will do little to allay fears of shareholders amid recent news that the appliance retailer issued profits warning which shocked markets last month as it predicted earnings would be £10m below expectations as it admitted to unrealistic hopes after publicity blitz last year.
The news at the time reported that:
Shares in AO World have crashed by nearly 32% after the online domestic appliances retailer surprised the City with a profits warning and admitting it may have been victim of flotation hype last year.
AO World stock, which attracted significant investor interest when it joined the stock market last year, plunged 47% to 154.5p at one point on Wednesday morning after it sounded the alarm on its full-year performance, before recovering slightly to close down 31.7%.
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AO triggered the plunge by admitting in a trading update that a tough fourth quarter for its UK business would weigh on results for the year to 31 March 2015.
John Roberts, its chief executive, said: “AO has experienced tougher than expected trading conditions in the final quarter of the year, as compared to the fourth quarter in the 2014 financial year.
“While we are disappointed that sales and profits are going to come in slightly below expectations, we remain committed to our market-leading, customer-focused business model.”