Currys boss ‘cautious’ of financial optimism as total earnings fall

Electronics retail large Currys has warned of lowered shopper spending as inflation and rates of interest hit consumers – because it revealed a dip in gross sales and earnings.

“Looking ahead, we’re wary of optimism about consumer spending power,” its chief government mentioned within the firm’s finish of 12 months outcomes.

Consumer sentiment has been excessive regardless of high price rises and rising borrowing prices resulting from interest rate hikes.

A carefully watched index of customer sentiment mentioned shopper confidence in June was at its strongest in 17 months and grew for the fifth month in a row.

Latest retail gross sales figures additionally showed growth when contraction was expected, illustrating the resilience of the UK economy.

Despite this, and unemployment hovering near a record low, the Currys boss, Alex Baldock, mentioned the chain is being “prudent” in its monetary planning and strengthening its stability sheet.

“We may be cautious in our promises for the short-term, but our confidence is undimmed as we build a stronger and more resilient business that is fit to prosper in the longer term,” he mentioned.

The UK and Ireland arm of the enterprise carried out nicely with earnings earlier than curiosity and tax of £170m, up 45% on final 12 months. Cost financial savings within the enterprise elevated margins and offset falling gross sales, the outcomes mentioned.

Operating prices fell and people financial savings additionally “more than offset inflationary cost pressures and increased business rates tax”.

UK and Ireland workers had been praised for his or her work. Mr Baldock mentioned their “great work shone through in world class engagement scores; in another year of record customer satisfaction; in maintaining number one market share”.

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But throughout the corporate total like-for-like gross sales fell 7% resulting from a fall in shopper spending, which Currys has attributed to persistent inflation and rising rates of interest.

At the identical time it mentioned spending on expertise had normalised after robust development throughout the pandemic.

“Our market has been tough everywhere, with depressed demand, high inflation and unforgiving competition,” Mr Baldock mentioned.

Performance within the Nordics, the place about 40% of Currys income is generated, is behind the drop in pre-tax revenue, down from £186m final 12 months to £119m this 12 months. The revenue is on the prime finish of steerage that had been issued after two revenue warnings.

No full-year dividend can be paid to shareholders on account of the unsure backdrop.

“We’ve had a very mixed year,” mentioned Mr Baldock.