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Currys PLC on Thursday reported a sharp swing to a loss in the six months that ended October 29, due to an impairment and increasing costs and as revenue declined amid disruption in the Nordic region.
The London-based electronics retailer posted a pretax loss of £548 million, swinging from a profit of £48 million in the previous year.
Revenue fell 6.5% to £4.47 billion from £4.79 million.
In the UK & Ireland, revenue dropped by 10% to £2.29 billion from £2.55 billion, which Chief Executive Officer Alex Baldock viewed as short-term disruption. UKI revenue was down 19% from three years ago, meaning before the Covid-19 pandemic, though up 2% like-for-like.
‘Currys UK & Ireland performance continues to strengthen, and is showing real momentum, reflecting good progress in our transformation. International, however, has had a tough period, and faces short-term but intense pressures from a disrupted market,’ he said.
In the Nordics, revenue was down 3.7% to £1.89 billion from £1.96 billion.
‘Internationally, the markets have been experiencing a painful period, and we’ve not been spared the impact of that. It’s been a difficult first half, with gross margins and profits sharply down, even as we’ve performed well on sales and costs. Our international markets have experienced the same pressures as the UK, with softer demand coupled with cost of goods sold inflation. But the Nordics has experienced substantial further disruption,’ Baldock said.
The lower demand left domestic competitors with excess stock, which they are now selling for heavy discounts, the CEO said.
Baldock described this as as substantially disrupting the market, but he expects these pressures to be temporary, with demand anticipated to normalise.
‘Our customers are feeling real cost of living pressure and our job is to help them get hold of the technology that’s more essential to their lives than ever,’ he said. ‘We’re doing that, through our price promise, giving customers access to responsible credit, and offering more products that save them money through lower energy costs. Our ’go greener’ range is flying off the shelves.’
Currys booked an impairment of goodwill of £511 million in the half-year, compared to no such impairment a year before. It said this arose at the time of the Dixons Carphone merger in 2014.
Currys also noted lower international profits and margin for the swing to a loss.
Currys now expects full-year pretax profit to be between £100 million and £125 million, downgraded from previously £125 million to £145 million. In the first six weeks of the second half, trading has been in-line with the first half.
The outlook is ‘obviously uncertain’, the company said, adding that it is not expecting any macro improvement anytime soon. However, it said it is more resilient now with a ‘strong’ balance sheet and £676 million of revolving credit facilities.
‘We will continue to build on a strong bricks and mortar retail business, to produce a world-class Omnichannel retailer and services provider, with stickier and more valuable customer relationships to match,’ Currys said.
Currys declared an unchanged interim dividend of 1.0 pence per share.
Shares were down 8.0% to 60.15 pence each on Thursday morning in London.
By Tom Budszus, Alliance News reporter
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