Currys has booked a loss as its chief executive warned that a “tough environment” showed little signs of disappearing in the short-term.
The laptop-seller slashed its full year outlook from an initial target range of £130m to £150m to a lower target of £100m to £125m.
It posted a group adjusted loss of £17m for the six months until the end of October, compared to a profit of £48m the previous year.
In interim results, Currys said a £548m statutory loss was driven by non-cash goodwill impairment of £511m, that arose around the time it merged with Dixons Carphone in 2014.
The impairment was mostly driven by increased discount rates as a result of the sharp increases in UK gilt yields around the end of the half-year period.
It also pointed to a weakening in demand for goods in its international markets due to smaller competitors clearing stock with discounted prices.
Alex Baldock, group chief executive, acknowledged the impairment was a “strikingly big number” but described it to journalists on Thursday morning as a “technical accounting matter”.
He said the charge was not related to performance, cash or value and also pointed to a “spike” in interest rates in September.
Sales dropped eight per cent in the first half of the year, missing analysts’ forecasts of a six per cent dip on a like-for-like basis.
Retail chief Baldock admitted it was “a tough environment, and we are planning for that to continue.”
However, he said the group expects it would maintain a trajectory of improving profitability in the UK and Ireland as well as seeing a “robust recovery” in profits internationally.
On the subject on pricing, Currys was “certainly not saying we are going to be able to hold back the tide completely” on potential future inflationary increases, Baldock told CityA.M.
The retailer had a “super clear” price promise to customers, with a price-match guarantee if shoppers find a cheaper product elsewhere, he added.
“We have heft with our suppliers and can make sure that our consumers get the best possible price.”
The head of the high street electronics retailer reiterated previous complaints that Amazon is getting a “free ride” from UK retailers by using the country’s infrastructure while dodging taxes.
“We believe everybody should pay their fair share,” he told CityA.M.
While Amazon does pay tax for its distribution warehouses, it has been accused of reducing its UK tax bills by sticking to a primarily digital footprint.
Baldock also lauded the government’s decision to drop a consultation on an online sales tax at its autumn budget last month.
A tax on e-commerce retailers would have been a “terrible idea,” and result in higher costs for shoppers while placing a “dampener on demand,” Baldock told CityA.M.
However, the Currys’ boss reassured journalists that the firm was not planning any store closures or redundancies.
The London-listed retailer had “missed the mark across the board,” according to Joshua Warner, market analyst at City Index.
“The company is finding life much more difficult now as consumers pullback spending on discretionary items amid the cost-of-living crisis and as the boom in demand for electronics and tech seen during the pandemic continues to fade,” Warner said.
Currys saw its share price tumble by around five per cent in early trading on Thursday morning. Its share price has taken a hit to the tune of 47 per cent over the past year to date.