By Evans Momodu
4 minute read
Currys has expressed concerns over the impact of the Labour government’s first budget, warning that customers are likely to face higher prices as the company grapples with rising costs.
CEO Alex Baldock outlined the challenges posed by recent economic policies and emphasized the pressures on consumer sentiment in recent months.
Key Points:
- Economic Challenges: Baldock noted that progress in easing financial pressures on households had "stalled," with inflationary and borrowing costs still significant issues.
- Budget Impact: Currys estimates its additional costs from the budget at £32 million, citing increased employer National Insurance contributions as a major factor. These measures, according to Baldock, will "depress investment and hiring" while encouraging automation and offshoring.
- Price Increases: To mitigate these pressures, the retailer plans to pass some costs onto consumers, making price rises "inevitable."
Performance Update:
- Currys reported a 2% rise in group like-for-like sales for the six months to October 26, including a 5% increase in the UK and Ireland. Its Nordics operations remain a challenge.
- The company reaffirmed its annual profit guidance, with sales leading into Christmas meeting expectations, which led to an 8% boost in its share price.
Industry and Analyst Insights:
- Sector-wide Challenges: Currys is not alone in voicing concerns about the budget's impact on business. Retailers across the sector have warned of price hikes and reduced investment due to increased taxes and costs.
- Analyst Perspective: John Moore of RBC Brewin Dolphin highlighted Currys' resilience, citing market share growth, improved buying margins, and a focus on emerging tech like AI-powered laptops. These factors position the company for long-term recovery and potentially renewed acquisition interest.
While Currys faces headwinds from fiscal policy changes, its proactive measures and focus on emerging trends may help it weather the challenges ahead, particularly as it gears up for a return to dividend payments in 2025.
Source: Sky news
