Currys reports £32m Budget tax hit

Consumer electronics retailer Currys has become the latest company to warn about the impact of Labour’s tax raid on its bottom line.

In its half-year results for the six months to 26 October 2024, published this morning, management said the estimated cost of recent tax policy changes could amount to as much as £32m.

The total includes a £9m hit due to National Living Wage increases, a £12m increase in the group’s National Insurance bill, £2m from the inflation-based increase in business rate taxes and as much as £9m as costs are passed on from suppliers.

Management said that while it would look to offset some of these cost pressures with cost saving measures, including “process improvement, automation, offshoring, outsourcing and overhead efficiencies,” some price rises “would be inevitable.”

For the six months to 26 October Currys reported adjusted earnings before interest and tax of £41m, up 52 per cent. Group free cash flow for the period hit £50m, up £46m.

Overall, revenue rose two per cent on a like-for-like basis and Currys ended the period with a net cash balance of £107m.

Alex Baldock, Currys CEO said: “We’re very encouraged by our progress. Currys’ performance continues to strengthen, with profits and cashflow growing significantly, and the group’s balance sheet is strong.

“We were well prepared for our Peak trading period, with healthy stock and market-beating, best-ever deals that show our unmatched importance to suppliers. We’re trading in line with expectations. One highlight is rising demand for AI laptops, where we enjoy over 75 per cent market share in the UK. AI is a trend with a lot further to run.

“Looking ahead, we’re confident of continuing our progress, and expect to grow profits and cashflow as promised this year. This is despite new and unwelcome headwinds from UK government policy. These will add cost quickly and materially, depress investment and hiring, boost automation and offshoring, and make some price rises inevitable.

“Still, there’s plenty we can control, including mitigating much of this headwind. We’ll keep colleague engagement world class, customer satisfaction increasing, cashflow growing for shareholders, and playing an ever-bigger role in society. We have growing momentum at Currys. As ever, I’m hugely grateful to the tens of thousands of colleagues whose brilliant work makes all this possible, and who are building this ever-stronger Currys.”