Currys PLC (LSE:CURY) issued a profit warning for the year after its international business took a significant profit hit, resulting in a slide into the red for the electrical goods retailer in the first six months.
The FTSE 250 company said it expects full-year adjusted profit before tax in the range of £100mln to £125mln, compared to previous guidance of £125mln to £145mln.
This, Currys said, was the result of a significant fall in profits in its international markets “due to actions taken in the face of competitors’ heavy discounting” in the six months to 29 October 2022.
The first-half adjusted loss before tax was £17mln, compared with a profit of £45mln in the same period last year.
“Lower demand has left domestic competitors with excess stock, which they're now heavily discounting. This has substantially disrupted the market, and required margin investment to keep our sales strong,” said chief executive Alex Baldock.
“We expect these pressures, intense though they are, to be temporary - demand will normalise, excess stock will wash through, and competitors will find unprofitable aggression hard to sustain.”
Currys said its UK & Ireland business reported profit growth in the first half through gross margin improvements and cost savings offsetting sales decline.
"Currys UK&I performance continues to strengthen, and is showing real momentum, reflecting good progress in our transformation. International, however, has had a tough period, and faces short-term but intense pressures from a disrupted market,” said Baldock.
Like-for-like sales were down 8% in the first half, while revenue slipped 7% compared to the same period last year.
The group ended the period with debt of £105mln, although it has significant liquidity headroom given a revolving credit facility of £676mln.
Currys added that it would continue to make its technology accessible to customers during the cost-of-living crisis through its price promise, offering responsible credit and providing products that save money through lower energy costs.
An interim dividend of 1p was declared, in line with last year.