Currys expects further falls in sales as inflation and rate rises bite

The boss of electronics retailer Currys said consumer confidence was still in the doldrums and warned that sales would continue to fall this year as shoppers struggled with high inflation.

In annual results on Thursday, the group scrapped its final dividend and reported an annual loss before tax of £450 million (€522 million), driven by a non-cash charge of £511 million. Its shares were down 11 per cent to 48p in the early afternoon.

Chief executive Alex Baldock said: “We think that there’s still significant inflationary pressure in the market. Interest rates continue to rise and have yet to fully bite consumers. We would rather be on the prudent side. If the market is better than we’re expecting, we will be ready and we will do better.”

Adjusted profit before tax, the group’s preferred metric, fell 38 per cent to £119 million during the period, while like-for-like sales fell 7 per cent. Revenue was down 6 per cent to £9.5 billion.

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Last December, the group scaled profit expectations downwards to between £100 million and £125 million, from the £130 million-£150 million range guided in July last year.

[ Retailer Currys cuts annual profit outlook after half-year loss ]

Currys, which sells electronics in Ireland, Britain, the Nordics and Greece, has been cutting costs to strengthen its balance sheet and to try to keep prices down. It will also more than halve its pension contributions from £78 million to £36 million over the next two years, the company said, after its deficit narrowed partly thanks to higher interest rates.

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The company said all of its Irish Carphone Warehouse stores had now closed. Currys says it continues to operate at 16 sites across the State. The group does not break out specific performance figures for the Irish business.

The Nordics business, which has been a drag on the wider group, had “a really weak year” weighing on “our strengthening performance” in the UK.

People are spending on gaming, coffee machines and electronic haircare appliances to try to save money by doing more at home, Currys said. “What’s going less well is smart speakers,” Mr Baldock said. “Amazon Alexa has had a terrible year.”

He said he expected sales to continue to slide in the year ahead because of inflation and the rising cost of living. “We’re not calling inflationary pressures over yet.”

Although its shipping costs are falling, the group’s energy and wage bills remain high. In Ireland and Britain, the group raised salaries 14 per cent in the past year and 37 per cent over the past five years to attract and retain staff.

“We’re delighted to welcome Frasers to the register,” Mr Baldock added in response to the recent stakebuilding by the sportswear retailer. “We share a vision for omnichannel retail – we both like stores, we both like online... and when it comes to partnering with [a company in] the technology space which they want to do, we’re the natural choice,” he said.

“This is a potentially interesting partnership that we’ve started discussions on... There’s a number of avenues that we’re exploring.” – Copyright The Financial Times Limited 2023