Currys reported strong profit growth driven by AI-enabled laptops and a growing mobile sector. However, impending cost increases pose a challenge as recent UK policy changes have a financial impact.
- Currys experienced a robust first half of the year, marked by increased demand for AI laptops and mobile growth, boosting profits significantly.
- Recent policy adjustments in the UK may elevate Currys’ costs by up to £32 million, affecting investment and operational strategies.
- The retailer achieved a 6% sales rise in the UK and Ireland, despite facing declines in Nordic markets, demonstrating strategic resilience.
- Currys prepares for future trading challenges with a maintained profit guidance amid external pressures and inflation concerns.
Currys has experienced a remarkable first half, with the demand for AI-enabled laptops and a strengthening mobile business substantially boosting its profits. The retailer has strategically capitalised on these market segments, aligning its operational focus with evolving consumer preferences and technological trends.
However, recent UK government policy changes threaten to increase Currys’ costs significantly—up to £32 million. These include a £9 million impact from rises in the National Living Wage, £12 million from increased National Insurance contributions, an additional £2 million in inflation-related business rate tax hikes, and up to £9 million from supplier cost escalations. CEO Alex Baldock commented that these changes will “add cost quickly and materially, depress investment and hiring, boost automation and offshoring, and make some price rises inevitable.”
Despite these challenges, Currys reported a 6% rise in UK and Ireland sales for the six months leading up to October 26, propelled by strategic initiatives and market share expansion. Total revenue hit £3.9 million, marking a 1% year-on-year growth, with a 2% like-for-like increase that countered a 2% revenue decline in its Nordic operations. Remarkably, adjusted EBIT soared by 52% to reach £41 million, spearheaded by a 53% profit increase within the UK and Ireland division.
CEO Alex Baldock expressed confidence in the company’s trajectory, highlighting its dominance in the AI laptop market with over 75% UK market share. He remarked that “AI is a trend with a lot further to run,” showcasing Currys’ strategic alignment with technological advancements. The mobile sector also saw significant growth, with iD Mobile subscribers rising 32% year-on-year to reach 2 million.
Currys has effectively bolstered both its online and physical store channels, with enhanced customer engagement and a focus on valuable solutions boosting growth. Key drivers such as B2B sales and expanding mobile operations have been pivotal, reflected in the company’s increasing sales, market share, gross margins, and profits. Currys entered its peak trading period well-prepared, boasting healthy stock levels and competitive deals, highlighting its significant supplier connections.
Looking ahead, Currys retains its full-year guidance, anticipating prolonged profit and cash flow growth with an aim for at least a 3% adjusted EBIT margin, despite contending with inflation and evolving government policies.
Currys remains focused on maintaining strong growth despite impending cost pressures from UK policy changes, striving to align resources and strategies effectively.
