Currys looks to AI tech to drive growth as profits climb. The boss of the UK electrical chain Currys has said it stands to gain from the rise of artificial intelligence, with AI-enabled mobile phones and computers selling well, as the company battles to get back on track.
Samsung’s Galaxy S24 mobile phone, which uses AI tools to offer better photography and instant translation, is one of its bestsellers, alongside more traditional products such as large, 85-inch-plus TV screens, boosted by the Euro 2024 football tournament, along with air fryers, action cameras, and drones.
During the cost of living crisis, fewer consumers upgraded appliances, and the demand for small electrical goods was particularly affected.
On Thursday, Currys reported a 2% drop in UK like-for-like sales in the year to 27 April, while revenues in Scandinavia fell by 3%. Even so, underlying profits before tax climbed by 10% to £118 million.
This morning, we have announced our Full Year results for FY23/24, with Group adjusted profit before tax at £118m.#amazingtechnology #retail pic.twitter.com/PBTxycvnEL
— Currys plc (@currysplc) June 27, 2024
After three years of revenue declines, there were reasons to be more cheerful about the outlook for topline growth, said Alex Baldock, the Currys chief executive.
He said: “When we look at what we sell, the coming wave of AI-led technology offers arguably the most exciting tech cycle since the Apple iPad in 2010.” AI tools “help consumers solve real problems,” he said, ranging from a long battery life of 22 hours and better camera skills to studio-quality sound for video conferencing.
Currys said it was the first retailer globally to launch Microsoft Copilot+PC, a computer with an AI companion. Other new AI products include video games, which promise a better game experience and an end to online cheats.
Companies such as Nvidia are working on characters controlled fully by AI to enable real-life conversations.
Baldock said: “We’ve seen a depressed consumer environment in all our markets in recent years. That said, things are improving. Consumer confidence is turning up and is nine points higher than it was a year ago. The big-ticket purchase index is also up.”
The retailer is also using AI to improve its customer service, for example, for the after-sales chatbot, working with its partners Accenture and Microsoft. Currys has become Microsoft’s first official retail repair partner in the UK.
Guy Lawson-Johns, an equity analyst at Hargreaves Lansdown, said: “An increase in UK consumer confidence, driven by rising economic optimism, suggests that a recovery in discretionary spending may be underway.”
Currys, a takeover target earlier this year, forecast AI-powered gadgets would help to deliver another year of profit growth after a 10% rise in 2023-24 that reflected a steady improvement in trading.
The group, which sells fridges, washing machines, tumble driers, televisions, computers, and other consumer electricals, said trading in the early part of its new financial year had been in line with its expectations.
“We’re planning prudently but confidently for the year ahead, on course to grow both profits and cashflow while carefully stepping back up to more normal investment levels,” CEO Alex Baldock said.
Currys made an adjusted profit before tax of 118 million pounds ($149 million) in the year to April 27 – in line with guidance upgraded last month and up from 107 million pounds made in 2022-23.
That was achieved despite a 4% fall in revenue to 8.48 billion pounds, with like-for-like sales down 2% in the UK and Ireland division and down 3% in the Nordics, but improving through the year.
Gross margin was up in both divisions, offsetting the sales decline. The UK was held back by weakness in demand for discretionary items due to high inflation and rising interest rates.
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Average UK wages are, however, now rising faster than inflation, and consumer sentiment in June recovered to its highest point in November 2021, according to Britain’s longest-running consumer confidence survey published last week.
Currys shares, 11% of which are owned by Mike Ashley’s Frasers Group, are up 44% year-on-year. Earlier this year, Currys saw off bid interest from U.S. investor Elliott Advisors and China-based online retailer JD.com.
Both had been attracted by Curry’s extensive distribution network. In April, Currys completed the disposal of its Greek business, making proceeds of 156 million pounds. On Wednesday, rival AO World also said it was confident of profit growth in its current financial year.
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