Currys sinks to loss after international rivals slash prices

However, profits in the UK and Ireland have bucked the trend as it said it was on track to make £300m in cost savings across the region.

Adjusted earnings reached £25m in the six months to October 29, up 25 per cent from last year. Meanwhile, revenues in the UK and Ireland fell by a tenth on last year and were 19 per cent lower than the same period in 2019.

And across the group, which includes the Nordic countries and Greece, adjusted pre-tax losses totalled £17m, plunging by £62m compared to the same time last year. Currys said that it has had a “painful” period internationally with substantial disruption in the Nordic countries and in Greece as competitors were forced to heavily discount excess stock while Currys kept its prices the same.

It is also seeing pressures in the UK with softer demand coupled with cost inflation, which is hitting retailers up and down the country.

Currys acknowledged that its customers are facing cost-of-living pressures and it is trading in a tough environment, which it does not expect to improve over the next six months.

As a result of the international disruption, the group downgraded its full-year profit expectations to between £100m and £125m, whereas previous guidance had estimated profits between £125m and £145m.

Alex Baldock, Currys group chief executive, said: “Currys UK and Ireland performance continues to strengthen and is showing real momentum, reflecting good progress in our transformation.

“International, however, has had a tough period and faces short-term but intense pressures from a disrupted market.

“It’s a tough environment, and we are planning for that to continue. Still, we expect to maintain the trajectory of improving UK and Ireland profitability and a robust recovery in international profits.

“By focusing on the things we can control, while doing everything we can to support our colleagues and customers, we’ll ride out the current turbulence and emerge an even stronger business well set for long-term success.”

Richard Hunter, Head of Markets at interactive investor, commented: “The ability for consumers to take face-to-face advice from experts is a primary reason for the group making two-thirds of its sales in store, yet without impacting on an online market share which remains largely intact at 32 per cent.

"The model also promotes the ability to cross-sell and upsell some of its other offerings, such as recycling, Care and Repair and the provision of credit services.

“Even prior to today’s negative response to the update, the share price reaction to the challenges on the table had been a decline of 47 per cent over the last year, as compared to a drop of 15 per cent for the wider FTSE250.

"There are pockets of hope, particularly in the UK business, although the timing of a normalisation in the Nordic markets is difficult to predict. The company is therefore remaining cautious about the immediate outlook, which is line with a divided market consensus of a hold, indicating that investors are not quite ready to buy in to any recovery story.”