Omicron variant takes heat out of Currys as sales cool ahead of Christmas
Electrical goods retailer Currys has warned of cooling sales in the crucial run-up to Christmas.
Bosses said the emergence of the Omicron variant has left the future looking uncertain amid the potential for further restrictions. Scottish stores face the prospect of social distancing and additional mitigation measures from this weekend.
The comments came as the group revealed that sales in the UK and Ireland fell 4 per cent to £2.5 billion for the six months to the end of October compared with the same period a year ago.
However, underlying profits in the UK and Ireland rose from £25 million to £33m following cost-cutting measures across the business.
Chief executive Alex Baldock told investors: “Our market has been softer over recent weeks, and we may face into further headwinds from Omicron and associated restrictions, but the stronger business we've built can ride out both the industry-wide disruption to supply chains and bumpy demand.”
At a group level, including its international businesses in Greece and the Nordic region, sales were down 2 per cent to £4.8bn, with pre-tax profits rising 6.7 per cent to £48m.
Despite its cautious outlook, the company, which has gone through a series of name changes, said it would spend £75m buying up shares from January and would also pay out a 1p-a-share dividend to shareholders.
Adam Vettese, an analyst at investment platform eToro, said: “Currys says it remains on track to meet its full-year profit guidance of £160m, although trading has softened in recent weeks.
“Like-for-like revenue is down year-on-year, admittedly against high comparatives as a wave of pent-up shopping demand was unleashed by the lifting of lockdown.
“It could be with the rise of the Omicron variant that fewer people are physically visiting stores, although there is no evidence of that yet in official data.
“Online sales currently account for 43 per cent of Currys’ total in the UK, with most people liking to research technology online and then see their purchase physically in store before parting with their cash.”
Freetrade senior analyst Dan Lane noted: “Comparing numbers to last year is still a murky business, the good thing is revenue is up across all regions if we go back to 2019’s simpler times. But the main focus of today for a lot of shareholders will be the reiterated commitment to paying a dividend and kicking off share buybacks in January.
“The market tends to get a bit over-awed at buybacks these days. But returning cash to shareholders needs to be a reflection of Currys seeing good value in its own shares rather than just pumping cash back into the market.”
Electricals proved particularly popular for the chain’s customers, with sales still 21 per cent ahead of pre-pandemic levels, although they fell 1 per cent in the past six months compared with a year earlier as pent-up demand cooled.
Meanwhile, pressure has come from supply chains, with Currys saying it has seen challenging conditions.
Baldock added: “Since the start of the Covid pandemic in early 2020 there has been a shortage of high-demand tech products or products where manufacturing has been limited due to pandemic restrictions.”
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