Currys has trimmed its annual profit forecast after a shortage of goods ranging from PlayStation 5 consoles and Apple products to hairdryers and TVs resulted in a 5% fall in sales over the peak Christmas period.
The UK’s biggest electrical retailer said sales were hit by problems including the global chip shortage, which is affecting the supply of electrical goods including TVs and appliances and the shipping of products.
Demand for some products, including TVs and smart home products such as voice-controlled speakers, was also down as household budgets are 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. He said there had been problems with “getting hold of people, containers, [lorry] trailers as well as product.”
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Currys, which has lowered its full-year profit guidance from £160m to £155m, said the overall UK market for sales of technology products was down 10% at Christmas.
Baldock said Currys had gained market shares as it had been able to get better supplies than rivals of popular items such as gaming consoles, Dyson hairdryers, Apple computers and iPhones. He said sales of gaming kit for the chain rose 16% despite shortages of key products.
“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 everyone may not have got their first choice of product this Christmas, we had plenty of choice for everyone.”
However, he added: “We have seen some bumpy consumer demand during Christmas and patchy consumer confidence particularly when buying bigger ticket stuff. That was not helped by Omicron and we did see some concerns about the cost of living.”
Baldock said Currys was being “pretty prudent” by trimming profit expectations as there was uncertainty about “what is going to happen to real wages, the cost of living and the housing market.”
He said that price rises were “inevitable” across the electrical goods market this year and this might also have an effect on shoppers’ behaviour.
“Nobody has got a crystal ball but the market is definitely inflationary. That will contribute to the uncertainty of the outlook as consumers are obviously keeping a close eye [on prices],” he said.
Despite those problems, Baldock said he expected the technology market to remain bigger than before the pandemic because of the shift to working from home and towards gaming as a form of entertainment.
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Currys, which operates 800 stores and sells its goods online, said 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.
The company said 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, was focusing on “profitable sales, with good discipline on margin, cost and stock”.
Shares in Currys were down more than 6% on Friday afternoon.
