Currys expects sales to continue to fall this year as households buy fewer TVs, laptops and smart speakers because of pressure from the cost of living crisis.
The electricals retailer said sales of smart speakers had “fallen off a cliff” and people were delaying replacing items such as laptops and TVs as household spending power was squeezed by stubbornly high inflation.
Alex Baldock, Currys’s chief executive, said: “We are prudently forecasting another tough year and expecting the market to keep going down. We think there will be significant inflationary pressure while interest rates continue to rise and that has yet to fully bite consumers.
“People aren’t as interested in Amazon Alexa as they used to be,” he told BBC Radio 4’s Today Programme.
Baldock said shoppers were turning to its cheaper own-label lines – but also to more expensive, energy-efficient items, including fridges and washing machines, if they could afford them, as they attempted to save money over the lifetime usage of a product at a time of high gas and electricity bills.
Credit had “never been more important for customers than during a cost of living crisis” and consumers were “adopting our credit in record numbers”, with 12% more Currys shoppers using its service.
The electricals retailer said it would not pay an end-of-year dividend to shareholders, was cutting payments to its pension fund, and was reducing investment, after making a £450m loss in the year to 29 April. Sales fell by 6% overall, including an 8% drop in the UK.
The headline loss followed a one-off writedown on the value of its UK brands and a profits dive at its once healthy stores in the Nordic countries. Excluding one-offs, profits rose by 45% in the UK to £170m, which Currys said was because it had sold more services such as repairs and cut costs, for example by outsourcing its customer contact centre and some deliveries.
Baldock said that although Currys was experiencing a rise in the cost of goods, wages and energy bills, it would not pass the full rate of inflation on to customers. It noted that some costs, such as shipping, had fallen.
“We have kept a lid on price rises and kept our price promise to customers,” Baldock said in response to claims that retailers had been exploiting inflation to improve profits.
“In the UK we are making more profit, but it is important that we do so for colleagues, society and shareholders. We are still making less than £3 profit for every £100 of technology we sell. That is hardly excessive.”
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Shares in Currys were down by more than 10% on Thursday, making it the biggest faller on the FTSE 250.
A spokesperson for Amazon said: “It is important to note that Currys is responsible for a relatively small number of our high street device sales. Our customers continue to love Alexa.
“More than eight million people in the UK use Alexa every day and the number of UK customers interacting with Alexa increased 15% last year. Worldwide we have sold more than half a billion Alexa-enabled devices.”
