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Currys has trimmed its annual profit forecast after a shortage of goods ranging from PlayStation 5 consoles and Apple products to hairdryers resulted in a 5% fall in sales over the peak Christmas period.
The UK’s biggest electrical retailer said that sales were hit by problems including the global chip shortage, which is affecting the supply of goods from TVs to appliances, the shipping of products and a drop in demand as households budgets become increasingly squeezed.
“The technology market was challenging this Christmas, with uneven customer demand and supply disruption,” said Alex Baldock, the chief executive of Currys, which formerly traded as PC World, Carphone Warehouse and Dixons. “We have certainly had our hands full this Christmas with supply, not just of products but also of people, containers, chip sets, the full range.”
Currys, which has trimmed its full-year profit guidance from £160m to £155m, said that the overall UK market for sales of technology products was down 10% at Christmas.
“We are seeing patchy consumer confidence when it comes to the bigger ticket purchases like electricals, like technology that we sell,” said Baldock, speaking on BBC Radio 4’s Today programme. “It certainly hasn’t been helped by cost of living concerns, and hasn’t particularly been helped by Omicron either. Still, even with that patchy customer demand we have been able to keep growing and gain market share.”
Currys, which operates 800 stores and sells its goods online, said that sales in the UK and Ireland fell by 6% year on year in the peak trading period of the 10 weeks to 8 January. While consumers turned to online sales to avoid going to the high street, with digital revenues up 29% compared with the Christmas of 2019, it was not enough to overcome the company’s overall sales drop during the 2021 festive season.
Despite the trading problems, Baldock said the business traded profitability and outperformed the wider market.
“Customer demand for some tech was strong,” he said. “This was a gamers’ Christmas, the year that virtual reality broke into the mainstream, and when consoles flew off the shelves. Oculus Quest 2 and the PS5 were stars. Appliances large and small also enjoyed strong sales, as consumers continued to kit out their homes. Even though not everyone may not have got their first choice of product this Christmas we had plenty of choice for everyone.”
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The company said that for the 36 weeks to 8 January sales were down 3% year on year but up 11% compared with 2020. Baldock said Currys, which commenced a £75m share buyback scheme on Friday, is focusing on “profitable sales, with good discipline on margin, cost and stock”.
However, he added that there continues to be pressure on the supply chain and consumer demand.
“I am not counting on it getting any better,” he said. “There is plenty of uncertainty, not just on the supply side but also the demand side looking ahead, whether you are looking at cost of living, real wages, discretionary income or consumer confidence, which is one of the reasons we are being quite cautious in our outlook.”
Shares in Currys fell 4% on Friday morning.
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