UK electricity retailer Currys has warned that supply chain turmoil will continue after product shortages and “bumpy” demand have pushed Christmas earnings down.
Known as Dixons Carphone until last year, the company had £ 155m adjusted pre-tax profit over the £ 160m estimate just before the peak trading period for the year to the end of April. I expect it.
Despite the launch of the planned stock repurchase program, the stock fell 5 percent in early Friday trading.
Currys has been left out of a bumper U.K. retail sales season that has seen strong revenue reports and profit upgrades from a wide range of companies from Tesco Plc to Marks & Spencer Group Plc. The technology market has been hit by the global shortage of chips as well as the wider issues in moving stock around the world. Currys said while demand for some items was uneven, gaming products such as
Currys said while demand for some items was uneven, gaming products such as PlayStation 5 consoles and Oculus Quest 2 virtual -reality headsets “flew off the shelves.” The chain could likely have sold even more if supply had been better. In November, Sony Group Corp. reduced its PS5 production outlook for this fiscal year due component and logistics constraints
Group earnings for the 10-week period to January 8 were down 5%, worse than the 2% decline reported in the half-year results just a month ago.
In the largest markets, the UK and Ireland, sales fell 4% in half a year, compared to a year-on-year decline of 6%, but still did not reach an estimated 10% decline in the wider market. It was.
CEO Alex Baldock said sales of game consoles, virtual reality products, Apple computers and Dyson hair dryers were strong, but the company’s inventory wasn’t as high as expected.
Demand was weak in other areas, especially TVs, smart technology and vacuum cleaners.
Baldock made a cautious note for the rest of the year, saying the company is “preparing for another year of supply disruption.”
He also said there are already some signs that consumers are thinking twice about buying expensive tickets. “What about real wages, discretionary income and the housing market? What does that all bring to consumer confidence?”
In December, Currys warned that the market was softening in the run-up to Christmas, and that the resurgence in Covid cases as a result of omicron could further affect the vital period. The retailer is in the midst of a turnaround that has focused on lowering costs, closing stores, reducing exposure to a difficult mobile-phone business while investing in growth areas, such as its gaming division.
Chief Executive Officer Alex Baldock said that despite the muted festive performance, Currys grew market share with U.K. sales over Christmas declining less than the 10% year-on-year drop in the technology market overall.
Currys experienced a long period of active trading during the Covid-19 pandemic as household savings piled up and consumers bought laptops and printers for telecommuting and gaming devices during the blockade.
But it, and other “pandemic winners” such as Kingfisher and Halfords, are increasingly competing against the strong trading volume of the previous year.
Baldock said the company’s forecasts were based on demand returning to pre-pandemic levels, citing game growth, continued telecommuting, and more frequent product changes as factors driving future demand. He said he didn’t expect it.
“We’ve had problems getting hold of people, containers and products,” Baldock said. “We’d always like more gaming consoles, more of the virtual reality products that are breaking into the mainstream and more Dyson haircare and Apple products. We did get more than competitors, which is why we were able to gain market share, but we always want more.”
He added that it was well above the same period two years before the pandemic began. “The market was still 8% bigger than it was two years ago.”
Investec Bank analyst Ben Hunt said the warning was “disappointing,” but the downgrade was modest, and the company was simpler and able to generate cash than before.