UK CE retailers Curry’s who range products from several Australian Companies and is seen as a global CE retailer to watch has cut its annual profit forecast for second time in weeks.
This is seen by some Australian share listed retailers, as a major warning sign of what could happen in the Australian market next year.
Chief executive Alex Baldock said some competitors in northern Europe “have misjudged demand and are having to aggressively discount stock . . . nobody is making any money in the Nordics at the moment”.
Curry’s target of a 3% operating profit margin has also been pushed back from 2024 to 2025, It was originally forecast at 4%.
Like Australia the Nordic markets that take in Sweden, Denmark Finland and Norway are seen as “healthy, wealthy markets” so it came as a surprise when these markets started to have problems as inflation took a toll on markets.
Operating profit in its Nordics division fell to just A$5.4M in the six months to the end of October.
Last year it was A$103M with Curry’s now expecting a full year adjusted pre-tax profit to be A$180M $227M, it was originally tipped to be close to $263M
The charge resulted in a headline loss of £548mn against a profit of £48mn last year, on sales of $4.16B — down 10 per cent.
The Financial Times reports that the company make the majority of its profit in its second half, which includes Black Friday and Christmas
Baldock said the UK, where it is the market leader, had proved resilient. “Consumers are hard-pressed, they are spending less and there is some downgrading to cheaper products,” he said.
“But they are still spending more on technology than pre-Covid . . . and there is some trading up to more expensive items if they are more energy efficient,” he added, citing strong demand for air fryers and heat-pump tumble driers.
About 17 per cent of sales are now made with a credit component, putting the company ahead of a target set for the end of the next financial year. Baldock said credit scoring was “super-prudent” and there was no sign of stress in the loan book.
The FT reported that shares in Curry’s were down more than 6 per cent in early trade.
Citi analyst Nick Coulter said the change to full-year guidance largely brought the company into line with existing market expectations and saw “limited scope” for further downgrades.
He also said investors might place more value “on the structural margin gains in the UK relative to the transitory impact of excess inventory in the Nordics”.
