The UK equivalent of Harvey Norman, JB Hi Fi and The Good Guys, electricals retailer Currys, has given a clear picture that global supply and inflation issues are now seriously impacting CE and appliance retailers with the big retail group warning of profit and revenue cuts.
To counter this the business is looking to try and hold pricing to 2021 levels with Currys management set to try and push suppliers to take a hit on margins.
The business has cut its profit forecast warning its online growth will stall as consumers cut spending in the face of higher inflation.
Currys has predicted adjusted pre-tax profit of between £130mn and £150mn for this year, compared with a market consensus of £145mn, and warned that forecasting is more difficult than usual.
It also lowered its operating profit margin target for the following year from 4 to 3 per cent.
Chief executive Alex Baldock acknowledged that consumers were “feeling very hard pressed” but said that the consumer electronics market was still bigger than it was before the pandemic, partly because of the growth of gaming and working from home.
“Tech is a more important part of our lives,” he said. “We are expecting the market to remain sustainably larger [versus pre-pandemic].”
The Financial Times reports that Currys plans to focus on trade-in offers and credit deals and freeze some prices at 2021 levels in an attempt to drive sales.
“We will use our heft with suppliers and pass on those savings to consumers,” said Baldock, adding that the company had bought stock earlier than usual to take advantage of lower prices.
For the year to the end of April, the company reported adjusted pre-tax profit of £186mn, up from £156mn the year before, on sales of £10.1bn.
The result was ahead of forecasts though that was partly because of a £22mn one-off benefit from the revaluation of balances owed to it by mobile phone networks.
Currys said it had seen an impact of about £50mn from increased costs for shipping, staff wages and energy, offset by lower property costs as leases on some of its 300 UK stores were renewed at lower rents, and £69mn of other cost savings.