Currys and AO World to shed light on consumer demand for home upgrades

Investors will get a glimpse into whether consumers are loosening their budgets and upgrading their homes when AO World and Currys report on their yearly profits.

The rival electricals and home appliance retailers will be publishing their full-year financial results on Wednesday and Thursday.

Both companies have previously said they have felt the impact of shoppers spending more cautiously because of wider cost-of-living pressures.

However, inflation has dropped sharply in recent months and spending across the retail sector has shown signs of improvement, which investors could be hoping will translate into a stronger sales outlook for the two chains.

Currys, which reports on Thursday, is expected to report a pre-tax profit of at least £115 million in the year ending April 27, slightly lower than the £119 million reported the previous year.

It is also forecasting a 2 per cent dip in total sales compared with the previous year.

A group of analysts at AJ Bell said: “The fact that broadly flat profits should be seen as good news is a sign of how tough trading has been for Currys, where the Nordic business in particular has been under pressure and the cost-of-living crisis has put a squeeze on UK consumers.

“Improving consumer confidence thanks to cooling inflation, solid wage growth, lower energy bills and low unemployment could help Currys if those trends are maintained, even though its target market remains fiercely competitive.”

The company has been focused on improving its loss-making Nordics business, its second largest territory behind the UK and Ireland.

Chief executive Alex Baldock last month said Currys’ sales were growing again with good momentum in the UK and Ireland, and the Nordics “getting back on track”.

Meanwhile, AO World – an online retailer which sells household appliances like washing machines and fridges, and electricals like TVs and laptops – will unveil its full-year results on Wednesday.

The company undertook a major restructuring as part of efforts to strengthen its balance sheet and return to profit.

The overhaul, which including extensive cost-cutting, appeared to have paid off when it reported a pre-tax profit of £13 million in the six months to September, against losses of £12 million a year earlier.

However, it cautioned that it was expecting sales for the year to be about a tenth lower.

AJ Bell’s investment experts said that AO World’s share price was “nowhere near the high reached during the pandemic and lockdowns of four years ago, when consumers were spending freely and upgrading their homes”.

But, like its competitor Currys, AO World could benefit from improved consumer sentiment boosting spending on bigger-ticket items.

Investors will be looking for any guidance from the company about its sales expectations for the year ahead.

Press Association – by Anna Wise