Currys price increases are ‘inevitable’ after the £32m autumn budget
- Retailer has 75% market share in AI laptop market, says boss
Looming price rises at Currys are ‘inevitable’ ahead of a £32m hit from changes announced in the autumn budget, the retailer told shareholders on Thursday.
Currys said “some” price increases are on the way as it itemized £12 million in additional national insurance premiums and £9 million in new staff costs linked to the National Living Wage increases.
The retailer is the latest company to hit out against the changes, which have led to warnings of higher prices, store closures and job cuts when they come into effect from April next year.
Currys chief executive Alex Baldock criticized the ‘new and unwanted government policy headwinds’, which he said would ‘rapidly and significantly increase costs, depress investment and hiring, drive automation and offshoring and make some price increases unavoidable’ .
In addition to the direct financial impact of changes to employers’ national insurance contributions and the national minimum wage, Currys said there will be a £9 million impact due to ‘the passing on of these costs by some of our outsourcing partners’.
The country is also facing a £2 million increase due to the inflation-based increase in business taxes, Currys said.
Currys says it will face £32 million in additional costs as a result of changes to the autumn budget
But the additional cost headwinds did not dampen investor enthusiasm Currys shares rose 12.2 percent to 88.65p, taking one-year gains to almost 95 percent.
However, over the past five years, shares have fallen about 40 percent.
That came as the group reported half-year sales growth of 2 percent to £3.9 billion, while 6 percent growth in Britain and Ireland offset continued declines in the Nordic countries.
Adjusted profits shot up 55 percent to £41 million, while Currys reported strong growth in stores and online in Britain and Ireland.
Mark Crouch, market analyst at eToro, said: ‘Currys’ interim results indicate the home electronics retailer has firmly turned a corner.
‘Having recently suffered from declining profits and a weakening balance sheet, the company is now in a much stronger position.’
Currys boss Baldock also highlighted the retailer’s 75 per cent UK market share in the emerging market for AI-powered laptops, where he said the group was seeing rising demand.
“AI is a trend that has much further to go,” he added.
Aarin Chiekrie, equities analyst at Hargreaves Lansdown, said: ‘The integration of artificial intelligence into consumer electronics could herald the start of an upgrade cycle.
‘So far it has worked out well, but the figures for the first half will only be available at the end of October. The real litmus test will be the next set of results, which will highlight demand during the all-important Christmas period.”
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