Ao.com will use its German expansion to move into the Netherlands and Belgium as boss John Roberts claims its international potential was a key selling point to investors during its much talked about IPO.
Roberts, who it was “slightly ahead” of its slated 2015 opening in Germany, said he would use its infrastructure there as a launch pad into neighbouring countries the Netherlands and Belgium.
He said: “It’s like having your warehouse in Crewe and launching in Wales. There’s 27 million people live [in the Netherlands and Belgium]. For the categories we’re in, that’s a £50bn addressable market.”
Roberts said that its hefty £1.2bn IPO valuation, which many observers have blasted, was based on European expansion potential.
He said: “The dominant player in the dominant market usually takes 30% share. If online becomes the dominant channel, then we should become the dominant retailer in that channel. If we do we take 30% of a £50bn market – that’s why my investors invested.”
Roberts revealed that Ao.com will open a central distribution centre near Cologne with additional hubs near Berlin, Munich and Hamburg and will launch in Germany with next day delivery.
Ao.com adjusted EBITDA jumped 10.9% to £11.2m in its full year to March 31 but costs relating to its IPO dragged it into the red.
Operating profit before exceptional items was down from £8.4m to £8.2m, however, it incurred costs of £15.4m for its flotation earlier this year bringing it to a £7.2m operating loss. Sales surged 40% to £384.9m.
Ao.com added that the 2015 financial year has “started well with trading in line with our expectations in all respects”.
Roberts said: “I am delighted by the achievements the Ao team has delivered over the course of the last year and the progress we have made in positioning our business structurally and financially to realise the very exciting opportunity we have ahead of us.
“Our UK business continues to build strongly aided by a successful rebranding, introduction of same day delivery and entering the small domestic appliance and television markets.
“We are making great strides in preparing for our launch into Germany as the first step to becoming a leading European online electrical retailer.”
Ao.com’s capital expenditure for the year was £7.5m, up from £3.3m last year, as it invested in a new head office and its supply chain.
Gross margin increased to 19.3% from 18.5%.
The etailer said it benefited from introducing same-day delivery, extending the cut-off times for next-day delivery from 10pm to midnight, and the extension of services for cooking appliances to include gas and electrical installation.