Ahead of its interim results next week, Currys PLC (LSE:CURY) was hit by a downgrade from Deutsche Bank over the potential impact of cost inflation on the electronic goods chain.
Analysts at the bank downgraded the shares to 'hold' from 'buy' as part of a wider note on the retail sector.
Two main themes dominate the retail narrative, they argued: the ability of companies to manage extra employee cost pressure from the Autumn Budget, and the strength of consumer discretionary spending in the next couple of months.
"As retailers reach for levers of price and cost control, we view some as much better positioned than others," the analysts said.
Looking at Currys in particular, they said the downgrade reflects "caution on the scale of the budget impact, both the magnitude of cost inflation and potential for return of category spending".
The retailer has already removed around 15% of its operational cost base over the last three years, which leaves Deutsche Bank cautious about "the ease with which savings can be accessed".
In its last trading update, Currys reported 2% growth in like-for-like revenue over the 17 weeks to August.
Aided by “encouraging early adoption” of artificial intelligence-enabled products in the UK and Ireland, this region saw LFL revenue tick up 5%.
Subdued conditions continued to cloud the Nordic region, the group said, prompting a 2% fall in LFL sales.
Other analysts, such as Berenberg and Panmure Liberum expressed more optimism about Currys, though that was before the Budget.