Currys swings to loss, cuts guidance after big hit to international business

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By Geoffrey Smith 

AiVIF.com -- Currys (LON:CURY) swung to a hefty pretax loss in the first half of its fiscal year and cut its profit forecasts for the full year, after destocking and a slump in demand hurt its international business. 

The group took a £511 million (£1=$1.2380) impairment charge against its overseas businesses, which are concentrated in the Nordic region.  

The news was the latest in a growing tale of woe from consumer-facing businesses in the U.K., albeit the domestic business escaped the fate of the international one, as Currys pushed through price increases to offset falling sales volumes. Revenue in the U.K.& Ireland was still down 10% on the year, reflecting consumers' shift away from spending on appliances as the pandemic faded.

"Our International business...has had a difficult first half with margins sharply down," the group said in a statement on Thursday. "Lower demand has left domestic competitors with excess stock, which they're now heavily discounting."

It added it had already taken measures to defend margins and stressed that it expected this phenomenon to be temporary, saying that " demand will normalise, excess stock will wash through, and competitors will find unprofitable aggression hard to sustain." 

As a result of the impairment, Currys lost £548M before tax in the six months through October. Adjusted for the impairment, the loss was £17M, after a profit of £45M in the same period last year. 

Currys said trading since the October cut-off date had been in line with developments in the first half, and cut its guidance for full-year pretax profit (before impairments) to a range of £100M - £125M, from a previous estimate of £125M - £145M. It is still targeting a profit margin of 3% before interest and taxes within three years. 

Despite the loss, the company kept its interim dividend unchanged at 1p a share.