Currys has hailed a strong first half of the year as demand for AI-enabled laptops and a growing mobile business helped to drive profit growth.
But it also noted the impact of recent UK government policy changes, which are set to increase its costs by as much as £32m.
This includes a £9m hit from higher National Living Wage increases, £12m from a rise in National Insurance contributions, £2m from inflation-driven business rate tax hikes, and up to £9m in additional supplier costs.
On the “new and unwelcome headwinds from UK government policy”, CEO Alex Baldock said: “These will add cost quickly and materially, depress investment and hiring, boost automation and offshoring, and make some price rises inevitable”.
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The electricals giant reported a 6% rise in UK and Ireland sales for the six months to 26 October, driven by strategic initiatives and market share gains. Across the group, total revenue reached £3.9m, up 1% year-on-year and 2% on a like-for-like basis, offsetting a 2% decline in its Nordic operations.
Adjusted EBIT surged 52% to £41m across the group, with the UK&I division leading the way with a 53% profit boost.
Baldock said: “We’re very encouraged by our progress. Currys’ performance continues to strengthen, with profits and cashflow growing significantly, and the Group’s balance sheet is strong.”
He highlighted the retailer’s dominance in the AI laptop market, where it holds over 75% of the UK market share and said: “AI is a trend with a lot further to run”.
Mobile also continued to perform strongly, as iD Mobile subscribers numbers rose 32% year-on-year to 2 million.
Baldock added: “We made big improvements to both online and stores channels, customers continued to take more of the solutions and services that are valuable to them and to us, and such growth drivers as B2B and iD Mobile performed well. All this showed in growing sales, market share, gross margins and profits.
“We were well prepared for our Peak trading period, with healthy stock and market-beating, best-ever deals that show our unmatched importance to suppliers. We’re trading in line with expectations.”
As a result Currys has maintained its full-year guidance and expects to continue its trajectory of profit and cash flow growth, with the group targeting at least a 3% adjusted EBIT margin for the year, despite external challenges such as inflation and government policy changes.
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