Currys reported that its UK and Ireland profits are in line with expectations as its group sales decreased by four per cent, on a like for like (LFL) basis.
The retailer’s report highlights a decline in all markets as consumer spending remained under pressure from persistent inflation and rising interest rates, coupled with its increased focus on more profitable sales to maximise operating cashflow.
Alex Baldock, Group Chief Executive at Currys, said: “In the UK&I, profits are in line with expectations, as we focus on more profitable sales and growing the services that drive margins and customer lifetime value. 
“We’ve already substantially strengthened our balance sheet and liquidity this year. The proceeds of the planned sale of Kotsovolos, at a price that represents a very good outcome for shareholders, will strengthen us further. We’re confident we’re building a business that’s resilient today and fit to prosper long term.”
In the UK and Ireland, its adjusted EBIT (Earnings Before Interest and Taxes) decreased 40 per cent year on year (YoY). Its Underlying improvements to gross margin were largely offset by the non-repeat of c.£11m of benefits in our mobile category last year, while operating costs fell in absolute terms as savings in property, marketing and IT more than offset inflationary cost pressures.
“Our priorities this year are simple: to get the Nordics back on track, to keep up the UK&I’s encouraging momentum, while strengthening our balance sheet and liquidity. We’re making good progress on all these in a still challenging economic environment,” added Mr Baldock.
Currys financial performance:
- Group (LFL) revenue (4)per cent; Currency neutral revenue (4)per cent; Reported revenue (7)per cent
- Group adjusted loss before tax £(16)m, in line with last year
- UK&I LFL revenue (3) per cent, adjusted EBIT £15m, (40)per cent YoY – profit decline as anticipated as improved gross margin and costs savings of £53m were more than offset by inflationary pressures and non-repeat of £11m of mobile revaluations
- Group statutory loss before tax of £(46)m, from £(548)m in prior year
- Period end net debt of £(129)m – first-half cash outflow of £(32)m, compared to £(149)m outflow in prior year
- Period end IAS 19 pension deficit £(190)m, from £(249)m at year end
Mr Baldock’s review stated that its priorities this year were to keep the UK and Ireland momentum going, whilst maintaining a strong balance sheet and liquidity in a turbulent environment.
In the UK&I, its sales declined (3)per cent driven by a market decline and a (100)bps share loss. Over half of its share loss, it claims, was a result of deliberate actions to prioritise profits over sales.
The retailer said it remains passionate about its ability to give tech a longer life. It highlighted that it is the only UK retailer that has its own repair operations – read more about the retailers repair operations in ERT’s November issue.
It expects that when transactions are completed, the Group will finish the year in a net cash position.
