Investors are set to gain insight on whether there has been an increase in consumer spending regarding home improvements when both AO World and Currys reveal their annual profits.
The rival companies, which specialise in electronics and home appliances, are due to disclose their full-year financial results this Wednesday and Thursday respectively. Earlier, both companies indicated that increased cost-of-living pressures led consumers to spend more wisely.
Nevertheless, the recent significant decline in inflation, coupled with indications of retail sector improvement, might be giving investors hopes of a brighter sales outlook for the two retailers. Currys is presumed to report pre-tax profits upwards of £115million for the year ending April 27, when it discloses its results on Thursday.
This figure would be slightly less than the £119million registered the previous year. Also, it predicts a slight decrease of 2% in total sales compared to last year. Analysts from AJ Bell commented: "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."
They further added: "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 firm has been driving efforts to improve its unprofitable Nordics business, which ranks second in size after the UK and Ireland.
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Alex Baldock, the chief executive announced last month that sales at Currys were once again growing with strong progress in the UK and Ireland and that the Nordics are "getting back on track".
Likewise, AO World an online retailer selling household appliances such as washing machines and fridges, along with electricals like TVs and laptops will present its full-year results on Wednesday. This company committed to a significant overhaul in an attempt to bolster its balance sheet and return to profitability.
This restructuring process, including robust cost-cutting measures, apparently bore fruit when it unveiled a pre-tax profit of £13million for the six months leading up to September, compared to losses of £12million the year before. However, the online retailer cautioned that they expect sales for the year to be roughly 10% lower.
Investment specialists from AJ Bell noted that AO World's share price is still "nowhere near the high reached during the pandemic and lockdowns of four years ago, when consumers were spending freely and upgrading their homes".
However, mirroring its rival Currys, AO World could reap the benefits of improved consumer sentiment boosting spending on larger-ticket items. Shareholders also anticipate any indications from the company about its sales projections for the coming year.
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