Currys’ sales slip amid pressure from ‘depressed demand and high inflation’
Chief executive Alex Baldock said it is trading in a tough environment as it battles “depressed demand, high inflation and unforgiving competition”.
The London-listed company revealed that adjusted pre-tax profits dropped by 38 per cent to £119m for the year to April 29, due to lower profits in its Nordic business. It told shareholders the performance was “at the top end of the guided range”.
Currys also reported a £450m statutory pre-tax loss for the year, but said this was driven by a £511m non-cash impairment in its UK business linked to the merger of Dixons and Carphone in 2014.
UK profits rose by 45 per cent year on year, the company said, as it was boosted by significant cost savings to offset lower sales. The retailer said sales fell by 6 per cent to £9.5bn over the year to April, with an 8 per cent decline in its UK and Ireland operation. It added that trading over the start of the new financial year has been “consistent” with the board’s expectations.
“Nevertheless, the economic outlook remains uncertain in our main markets,” it added.
The group said it would not declare a final dividend payment to shareholders as a result of the uncertain backdrop.
Mr Baldock said: “We’ve had a very mixed year. Our strengthening UK and Ireland performance shows our strategy is working well. But our long track record of success in the Nordics was brought to an abrupt halt.
“Our market has been tough everywhere, with depressed demand, high inflation and unforgiving competition.”
Richard Hunter, Head of Markets at interactive investor, commented: “The traditional fanfare which accompanies full-year results is markedly absent in this release from Currys as it battens down the financial hatches.
"The results are something of a curate’s egg, summarised with no holds barred in the very title of the report, “Strengthening UK&I offset by poor Nordics performance”. The comment captures the group’s difficulties in a nutshell, and even within the UK business which accounts for most of group revenues, there are hurdles which are far from being overcome.
He added: “At a group level, there are pockets of optimism. Adjusted pre-tax profit of £119m was at the upper end of the group’s guidance, although it also represented a decline of 38 per cent from the previous year.
"This was achieved despite a decline in like-for-like sales of 7 per cent and in revenues of 6 per cent, with cost savings and reduced capital expenditure boosting the overall return.
"The Nordics region is proving to be a particular thorn in the side for Currys at present. The unit accounts for 40 per cent of overall revenues and has seen a rapid deterioration in consumer spending. This has resulted in the market being overstocked, leading to extremely heavy discounting from competitors who are selling at basement (and virtually unprofitable) prices, leaving Currys on the sidelines.”