Currys reports significant profit growth despite facing potential price hikes due to new tax impacts.
- Recent UK government policy changes are likely to increase Currys’ costs by £32 million.
- These changes include heightened National Living Wage and National Insurance contributions.
- Currys’ strategic market initiatives have led to strong sales growth in the UK and Ireland.
- The company’s AI-enabled laptops and mobile services are key drivers of its recent success.
Currys has recently highlighted its concern over impending price increases due to £32 million in additional costs attributed to UK government policy changes. These fiscal adjustments encompass a £9 million rise caused by the elevated National Living Wage, £12 million from increased National Insurance contributions, together with inflation-driven tax hikes and heightened supplier costs.
CEO Alex Baldock expressed apprehension over these “new and unwelcome headwinds,” forewarning that such financial pressures may lead to restrained investment and hiring, further escalating the likelihood of price increases. “These will add cost quickly and materially, depress investment and hiring, boost automation and offshoring, and make some price rises inevitable,” he stated.
Despite these challenges, Currys has experienced a 6% growth in sales in the UK and Ireland for the six months leading up to October 26, 2024. This progress can be attributed to effective strategic initiatives and the reinforcement of market share. Total revenue reached £3.9 million, marking a 1% overall increase year-on-year, with the UK and Ireland divisions showing substantial gains.
Currys has cemented its dominance in the AI-enabled laptop market, holding over 75% of the market share in the United Kingdom. The mobile sector has also seen substantial growth, with an impressive 32% increase in iD Mobile subscribers, totalling 2 million subscribers.
CEO Baldock expressed optimism regarding the company’s future, citing improvements in online and store channels and the continued uptake of B2B services and mobile offerings as major growth drivers. He indicated that Currys remains on course to achieve its full-year targets with an expected 3% adjusted EBIT margin, despite external challenges such as inflation and new government policies.
Currys is poised to navigate the challenges of new UK tax policies while continuing its growth in profits and market share.
