UK electricals chain Currys warns of price rises ahead but keeps profit outlook

Reuters

UK electricals chain Currys warns of price rises ahead but keeps profit outlook

Dec 12, 2024 at 7:48 am GMT

<html xmlns="http://www.w3.org/1999/xhtml"><head><title>UPDATE 2-UK electricals chain Currys warns of price rises ahead but keeps profit outlook</title></head><body>

Returns to bigger first half profit than expected

Shares up 13%

Says extra annual costs from budget are 32 mln stg

Keeps guidance for full year profit growth

Adds shares paragraph 3, detail paragraphs 8, 9 and 12

By James Davey

LONDON, Dec 12 (Reuters) -British electricals retailer Currys CURY.L added its voice to a chorus of corporate criticism of the new Labour government's tax rises on Thursday, saying price rises were inevitable, but it kept its forecast for annual profit growth.

The group, which sells consumer electricals from computers to washing machines, reported a return to first half profit that exceeded expectations, with robust sales in its home market more than offsetting subdued trading in its Nordics business.

Its shares were up 13%, extending 2024 gains to 77%.

Currys said that trading since the end of its first half has been in line with its expectations, reporting strong demand for AI laptops and mobile phones, supersized TVs, air fryers, noise cancelling headphones and drones.

"Looking ahead, we're confident of continuing our progress, and expect to grow profits and cashflow as promised this year," CEO Alex Baldock said.

This was despite what he called "new and unwelcome headwinds from UK government policy" - a reference to measures in October's budget.

"These will add cost quickly and materially, depress investment and hiring, boost automation and offshoring, and make some price rises inevitable," he said, echoing comments from a raft of other retailers.

Currys said measures, including hikes in employer National Insurance contributions and the minimum wage, would cost the group an extra 32 million pounds ($41 million) a year.

"We've already got plans to deal with about half of these headwinds and we're working hard to get after the rest," Baldock told reporters.

Currys, a takeover target earlier this year, makes most of its profit in its second half, which includes the key Black Friday and Christmas trading periods.

For the six months to Oct. 26, it made an adjusted profit before tax, its preferred profit measure, of 9 million pounds ($11.5 million), versus a loss of 16 million pounds in the same period last year.

Revenue rose 2% at constant exchange rates to 3.9 billion pounds, with like-for-like sales up 2% - up 5% in the UK and Ireland division but down 2% in the Nordics.

($1 = 0.7822 pounds)

Reporting by James Davey;
Editing by Catarina Demony, William James, Philippa Fletcher

</body></html>