Currys on track for profit target despite reduced sales
Currys has posted a drop in festive revenues in the UK and internationally, but says it is confident of delivering full year profits in line with guidance.
In the UK and Ireland, like-for-like sales declined by 5% year-on-year and by 4% on three years ago. The retailer said sales were strong in the domestic appliance and mobile categories in the ten weeks to 7 January, but weaker in consumer electronics and computing. In addition, stores outperformed online.
Meanwhile, profits in the UK and Ireland came in better than expected through gross margin increases and continued cost savings.
Currys’ international business also recorded a decline in sales with a 7% drop compared to the prior year, although sales were up 6% on pre-pandemic levels. Sales fell in all categories except small appliances. Furthermore, profits were below the retailer’s forecast due to a market-driven slowdown in its Nordics region and continued pressure on gross margin.
Alex Baldock, Currys group chief executive, said: “We’ve delivered a strong peak performance in the UK and Ireland, growing profits again through resilient sales, increasing gross margins (not least through record services adoption) and strong cost discipline. Our transformation is visibly succeeding.
“Internationally, it remains tough and we continue to face into intense, but temporary, market pressures. We’re not simply waiting for the external environment to improve, of course. We’ve already reduced stock levels and stepped up our measures to increase margins and reduce costs.”
Currys said it is confident of delivering full year adjusted pre-tax profit of between £100 million and £125 million, assuming no further unexpected macro deterioration. This compares to £186 million in the previous year.
Baldock said: “While markets remain challenging, we’re confident in our full year guidance as UK and Ireland improvements offset international weakness.
“Looking ahead, the results in the UK and Ireland show that we’re on the right path – we’re excited about our growing momentum, and we intend to build on it.
“We’re also confident in returning our high quality international business to robust profits and cash generation. Then we’ll see a group not just with today’s ever-growing colleague engagement and customer satisfaction, but with the sustainable cashflows to match.”
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