Currys warns on profits after dip in festive sales

CURRYS has trimmed its profit forecasts as it braces for a squeeze on household spending caused by rising taxes and energy bills.

The electricals retailer, which has 800 stores, now expects a profit of £155m this financial year, £5m lower than the prediction it made only last month.

Alex Baldock, chief executive, said the downgrade was “prudent” but vowed to compensate by slashing costs and winning more market share from rivals.

The update came as Currys revealed sales had tumbled over the crucial Christmas period compared with the previous festive season, sending shares down almost 7pc.

Mr Baldock said it was still uncertain what impact rising inflation, an increase to national insurance and surging energy bills would have on consumers this year.

“Clearly, to the extent that real wages do not rise, that is going to squeeze discretionary spending,” he said.

“That is where there is significant uncertainty ahead and that is why we have been prudent in our outlay.”

Mr Baldock said it expected costs to rise by £200m over the next two and half years, largely due to having to increase wages to remain competitive, but would make savings of £300m.

Having taken over from Sebastian James in 2018, the former Shop Direct chief executive sought to focus on overhauling the digital shopfront of Currys and improv- ing its stores.

After lashing out at his predecessor for leaving “plenty to fix”, he has been forced to preside over several profit warnings and shares have tumbled more than a 10th this year.

There were some rays of light in the update for the 10 weeks to Jan 8. Although like-for-like sales fell by 5pc compared with a year earlier, they were 4pc higher than 2019. However, UK sales were 2pc lower than 2019.

Currys said top sellers over Christmas included the Playstation 5 and Xbox Series X game consoles, as well as American-style fridge freezers, range cookers, bean-to-cup coffee machines, Dyson hair dryers and air fryers.

Currys also announced a share buyback scheme worth £75m.