Mon. Jan 17th, 2022

Currys, the UK electrical retailer, warned that supply chain disruption would continue as it reduced its profit forecast after product shortages and “bumpy” demand declined Christmas revenue.

For the year to end-April, the company – known as Dixons Carphone until last year – expects an adjusted pre-tax profit of £ 155m against an estimate of £ 160m made immediately before the peak trading period.

Its shares fell 5 percent in early trading on Friday, despite the launch of a planned stock buyback program.

Group revenue in the 10 weeks ending January 8 was 5 percent lower, worse than the 2 percent drop reported in the half-year results just a month ago.

In the UK and Ireland, its largest market, year-on-year sales were 6 per cent lower compared to a 4 per cent drop in the mid-year stage, although still less than an estimated 10 per cent drop in the broader market.

CEO Alex Baldock said although sales of game consoles, virtual reality products, Apple computers and Dyson hair dryers were strong, the company did not have as much stock as he would have liked.

In other areas, especially televisions, smart technology and vacuum cleaners, demand was weaker.

Baldock struck a cautious note over the rest of the year, saying the company is preparing for another year of disrupted supply.

He also said there are already some signs of consumers thinking twice about big ticket purchases. “What will happen to the housing market with real wages, with discretionary income? What will all this do to consumer confidence? ”

Currys experienced a long period of lively trade during the Covid-19 pandemic as household savings piled up and consumers bought laptops and printers for homework and gaming equipment during locks.

However, this and other “pandemic winners” such as Kingfisher and Halfords are increasingly facing strong trade figures from previous years.

Baldock said that while the company’s forecast is based on demand returning to pre-pandemic levels, he did not expect that to be the case, citing the growth of games, the persistence of homework and more frequent product replacement as factors driving future demand.

Sales were largely before the same period two years ago, before the pandemic began, he added. “The market was still 8 percent bigger than two years ago.”

Ben Hunt, an analyst at Investec, said that although the warning was “disappointing”, the downgrade was modest and that the company was still simpler and more cash-generating than before.

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