Currys price hikes ‘inevitable’ after £32m Autumn Budget hit

Looming Currys price hikes are ‘inevitable’ ahead of a £32million hit from changes announced in the Autumn Budget, the retailer told shareholders on Thursday.

Currys said ‘some’ price hikes are on the way as it detailed £12million of additional national insurance contributions and £9million in new staff costs linked to National Living Wage increases.

The retailer is the latest business to lash out against the changes, which have led to warnings of higher prices, store closures and job cuts when they come into force from April next year.

Currys chief executive Alex Baldock slammed ‘new and unwelcome headwinds from government policy’, which he said would ‘add cost quickly and materially, depress investment and hiring, boost automation and offshoring, and make some price rises inevitable’.

In addition to the direct financial hit from changes to employer national insurance contributions and the national minimum wage, Currys said it will see a £9million impact from ‘the pass through of these costs from some of our outsource partners’.

It also faces a £2million increase from the inflation-based increase in business rate taxes, Currys said.

But additional cost headwinds failed to dampen investor enthusiasm as Currys shares soared 12.2 per cent to 88.65p, bringing one-year gains to almost 95 per cent. 

However, the shares are down by around 40 per cent over the last five years.   

It came as the group reported 2 per cent like-for-like half-year revenue growth to £3.9billion, as 6 per cent growth in the UK and Ireland offset continued decline in the Nordics. 

Adjusted profits rocketed 55 per cent to £41million, as Currys reported strong UK and Ireland growth in-store and online.

Mark Crouch, market analyst at eToro, said: ‘Currys’ interim results suggest that the home electronics retailer has firmly turned a corner.

‘After grappling with falling profits and a weakening balance sheet in recent times, today the company finds itself in a much stronger position.’

Currys boss Baldock also highlighted the retailer’s 75 per cent UK market share in the emerging market for artificial intelligence-driven laptops, where he said the group was seeing rising demand.

‘AI is a trend with a lot further to run,’ he added.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: ‘The integration of Artificial Intelligence into consumer electronics may herald the beginning of an upgrade cycle.

‘So far, this is playing out well, but the first-half numbers only run to late October. The real litmus test will be the next set of results, which will highlight demand over the all-important Christmas period.’

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