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The boss of electronics retailer Currys said consumer confidence was still in the doldrums and warned that sales would continue to fall this year as shoppers struggled with high inflation.
In annual results on Thursday, the group scrapped its final dividend and reported an annual loss before tax of £450mn, driven by a non-cash charge of £511mn. Its shares were down 11 per cent to 48p in the early afternoon.
Chief executive Alex Baldock said: “We think that there’s still significant inflationary pressure in the market. Interest rates continue to rise and have yet to fully bite consumers. We would rather be on the prudent side. If the market is better than we’re expecting, we will be ready and we will do better.”
Adjusted profit before tax, the group’s preferred metric, fell 38 per cent to £119mn during the period, while like-for-like sales fell 7 per cent. Revenue was down 6 per cent to £9.5bn.
Currys, which sells electronics in the UK, Ireland, the Nordics and Greece, has been cutting costs to strengthen its balance sheet and to try to keep prices down. It will also more than halve its pension contributions from £78mn to £36mn over the next two years, the company said, after its deficit narrowed partly thanks to higher interest rates.
The Nordics business, which has been a drag on the wider group, had “a really weak year” weighing on “our strengthening performance” in the UK.
People are spending on gaming, coffee machines and electronic haircare appliances to try to save money by doing more at home, Currys said. “What’s going less well is smart speakers,” Baldock said. “Amazon Alexa has had a terrible year.”
Amazon said that Currys is responsible “for a very small number of our high street device sales. Our customers continue to love Alexa”.
Baldock said he expected sales to continue to slide in the year ahead because of inflation and the rising cost of living. “We’re not calling inflationary pressures over yet.”
Although its shipping costs are falling, the group’s energy and wage bills remain high. In the UK and Ireland, it raised salaries 14 per cent in the past year and 37 per cent over the past five years to attract and retain staff.
“We’re delighted to welcome Frasers to the register,” Baldock added in response to the recent stakebuilding by the sportswear retailer.
“We share a vision for omnichannel retail — we both like stores, we both like online . . . and when it comes to partnering with [a company in] the technology space which they want to do, we’re the natural choice,” he said.
“This is a potentially interesting partnership that we’ve started discussions on . . . There’s a number of avenues that we’re exploring.”