Shares in Currys dived by over 9 per cent today after the electricals retailer acknowledged sales had slackened lately due to supply chain challenges.
The FTSE 250 company said that it had taken measures to minimise disruption but had still incurred shortages and weaker sales of certain products, alongside the extra costs arising from these mitigation efforts.
It noted that supply problems had been exacerbated in recent months by the lack of van and lorry drivers, and warehouse staff, amid higher freight costs and Brexit-related trade issues impacting its ability to get goods transported to Ireland.
Store trade: Currys revealed its total half-year revenues remained flat year-on-year at £4.8billion on account of store reopenings leading to a decline in online commerce
Currys added that tightening government restrictions in response to the spread of the Omicron coronavirus variant had led to more uncertainty and could cause further damage to trade.
Nonetheless, it is ploughing ahead with a £75million share buyback programme next month and continues to expect adjusted pre-tax profits of around £160million this financial year, thanks to its solid first-half trading performance.
The group revealed its total revenues remained flat year-on-year at £4.8billion for the period covering the six months to the end of October, as store reopenings led to a decline in online commerce.
However, digital purchases were 54 per cent higher on their levels two years ago and comprise a third off all the retailer’s business, whilst international sales and like-for-like electricals purchases in the British Isles were both up 21 per cent.
Profits also more than doubled to £42million when compared to the same time last year and are a far cry from the £72million loss that the firm, then known as Dixons Carphone, made in 2019.
Demand for domestic appliances and gaming products was especially robust in its British Isles and Scandinavian markets, while the former region received an additional boost from sales of health and beauty goods.
Warning: ‘Our market has been softer over recent weeks, and we may face into further headwinds from omicron and associated restrictions,’ said Currys CEO Alex Baldock
Omnichannel sales were also strong as customers opted to shop online before completing purchases in stores, with more than 60 per cent of UK customers shopping that way.
Chief executive Alex Baldock said: ‘We’re showing that in technology retail omnichannel wins.Yes, more customers are shopping online, and our hard work to build a strong online business has seen us thrive here.
‘But most customers buy Tech Blog through both online and stores, our sweet spot, where we’ve worked hard to build on our strengths.That’s paying off.’
He admitted that the group’s sales ‘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.’
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Britain had a record 1.21 million job vacancies between September and November, according to figures from the Office for National Statistics (ONS), much of it down to immigrants returning to their home countries during the pandemic.
The shortage of workers in multiple sectors has led many firms to increase starting salaries in an attempt to lure staff and brought about more competition among businesses for talent.
This has forced many of them to raise prices of goods and services at the expense of consumers, which has been further compounded by the shortages of goods and higher prices of raw materials.
Consequently, the UK’s inflation rate has jumped considerably this year, including by 5.1 per cent last month, the ONS revealed today.This is the first time inflation has surpassed 5 per cent since September 2011.
Commenting on Currys, Hargreaves Lansdown equity analyst Matt Britzman said: ‘Today’s inflation news adds another headache. If inflation remains persistent, consumers will have less disposable income to play with.
‘New TVs and expensive washing machines are likely to be some of the first items to go if spending gets reigned in.
Yet he added: ‘Looking longer term, online sales making up 33 per cent of total sales mean the group’s in a decent place to weather any restrictions.The foundations still look strong and the longer-term prospects are promising.’
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