Currys expects sales to continue to fall this year as households delay replacing TVs and laptops despite using credit to buy more energy-efficient appliances such as better washing machines, microwaves and air fryers in an attempt to save money over the longer term.
The electricals retailer said it would not pay an end-of-year dividend to shareholders, was cutting payments to its pension fund and was reducing investment after making a £450m loss in the year to 29 April. Sales fell by 6% overall, including an 8% drop in the UK.
The headline loss followed a one-off writedown on the value of its UK brands and a profits dive at its once healthy stores in the Nordic countries. Excluding one-offs, profits rose by 45% in the UK to £170m, which Currys said was down to selling more services such as repairs and by cutting costs, for example, by outsourcing its customer contact centre and some deliveries.
Alex Baldock, its chief executive, said: “We are prudently forecasting another tough year and expecting the market to keep going down. We think there will be significant inflationary pressure while interest rates continue to rise and that has yet to fully bite consumers.”
Currys has held market share but shoppers are buying fewer items – taking longer to replace some items such as TVs and laptops as household spending power is squeezed by stubbornly high inflation.
Baldock said shoppers were turning to both its cheaper own-label lines but also more expensive energy-efficient items if they could afford them, as consumers looked to save money over the lifetime usage of a product at a time of high gas and electricity bills.
The company said credit had “never been more important for customers than during a cost of living crisis” and consumers were “adopting our credit in record numbers”, with 12% more of its shoppers now using its service.
Baldock said that although Currys was experiencing a rise in the cost of goods, wages and energy bills it would not pass the full rate of inflation on to customers. It noted that some costs, such as shipping, had fallen.
“We have kept a lid on price rises and kept our price promise to customers,” Baldock said in response to claims that retailers had been exploiting inflation to improve profits.
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“In the UK we are making more profit but it is important that we do so for colleagues, society and shareholders. We are still making less than £3 profit for every £100 of technology we sell. That is hardly excessive.”
Shares in Currys were down by nearly 12% on Thursday, making it the biggest faller on the FTSE 250.
