The change in spending habits brought about by coronavirus restrictions has helped make an online appliances retailer this year’s top U.K. midcap stock.
AO World Plc shares have roughly tripled so far in 2020, making them the best performer in the FTSE 250 Index. They rose as much as 16% on Thursday after the company said preliminary revenue for the six months to Sept. 30 increased about 57% from a year earlier.
Chief Executive Officer John Roberts, who founded the business in 2000, said the last six months had been like no other. Noting that a “global, structural shift in customer behavior to online” has been accelerated by the Covid-19 pandemic, the company said not even the reopening of competitor brick-and-mortar stores could halt its momentum in the latest quarter.
“This is another strong trading update reflecting the acceleration in online shopping,” Shore Capital analyst Greg Lawless wrote in a note.
AO isn’t the only one benefiting as customers splash out more on the homes they are having to spend so much time in. Furnishings retailer Dunelm Group Plc said on Thursday its sales rose 27% in the 13 weeks ended Sept. 26. Although its shares slipped in line the broader market, they are still up 30% this year, while DIY retailer Kingfisher Plc has gained 40%.
“The sustained high levels in web-traffic to property portals and e-commerce sites suggests home-improvement remains top of mind, with Kingfisher, Travis Perkins and AO World key plays,” Jefferies economist David Owen wrote in a note dated Oct. 14.
For AO shareholders who bought into the stock when it first listed in 2014, this year’s gains provide only partial comfort. Despite the rally, the stock still trades 7% below the initial public offering price of 285 pence.