Online electricals retailer AO World has decided to close its German business and aims to focus on its operations in the UK.
The announcement comes after the retailer initiated a strategic review of its operation in Germany due to the changes in trading environment including high competitive landscape and supply chain disruption.
The company in a filing said: “Having evaluated a range of strategic options during the review process, the Board has decided that closure of the German business is the best course of action. This decision was based on the continuing deterioration in the outlook for the German business, as well as the Board’s responsibilities to shareholders and other stakeholders.”
AO World, which started business in 2014, has warned that the closure will cost the company up to £15m ($18.73m).
The German business represents 10% of AO’s total revenue.
The company plans to continue trading in the country for a short period to allow and orderly closure for its customers, suppliers and employees.
AO added: “The Board wishes to thank all the employees in AO’s German business for their hard work and dedication since we launched the business in 2014.”
Following the closure, the company plans to prioritise on its online position in the UK electricals market and improve its profit and cash generation potential.
The company concluded: “Given the strength and scale of the AO business model, its market-leading, consistently high levels of customer satisfaction, and the structural market trends towards online retailing, the group continues to have confidence in both its strategy and its long-term prospects.”
AO will continue to trade in line with the board’s expectations for fiscal 2023.