BUSINESS LIVE: Sainsbury’s plots banking withdrawal; IDS revenues soar; Watches of Switzerland slashes guidance

Currys has forecast full year profit ahead of market expectations after stable gross margins and cost savings offset a fall in underlying sales over the Christmas trading period.

The seller of cookers, fridges, washing machines, TVs, computers and mobile phones said it now expected a full year 2023/24 adjusted profit before tax of £105million to £115million.

Prior to the update, analysts were on average forecasting £104million, down from the £119million made the previous year.

Currys said like-for-like revenue in the UK & Ireland business fell 3 per cent in the 10 weeks to 6 January, with strong sales in mobile, offset by weaker trends in TVs and computing.

‘We’re in a healthy financial position, and our strategy is delivering a consistently improving customer proposition,’ CEO Alex Baldock said.

‘As consumer confidence improves, we’ll be well placed to build on these strong foundations.’

Luxury watches retailer Watches of Switzerland has slashed its annual revenue guidance, as consumers continue to rein in spending and move away from splurging on luxury items.

For full-year 2024 revenue is now expected to be between £1.53billion and £1.55billion, compared with its earlier forecast range of £1.65billion to £1.7billion.

CEO Brian Duffy said:

‘The festive period was particularly volatile this year for the luxury sector, with consumers allocating spend to other categories such as fashion, beauty, hospitality and travel. Whilst we are disappointed with this trend, we are encouraged by our market share gains in both the US and UK.

‘I would like to thank our colleagues for continuing to provide high quality service and support to our clients against this challenging backdrop.

‘We remain confident in the markets in which we operate, our model and the delivery of our Long Range Plan announced to the market in November 2023.’

Matt Britzman, equity analyst, Hargreaves Lansdown:

‘With strikes in the rear-view mirror, Royal Mail is starting to deliver the goods once more. That’s welcome news for investors in its parent company, IDS, but we’re far from calling this turnaround a job well done. Royal Mail is fundamentally stuck in the past, and to some extent, that’s out of its own hands.

‘As the UK’s designated postal service, it must deliver letters six days a week – among other things. Given the letter business is in structural decline, with no real hopes of a recovery, that puts Royal Mail in a tricky spot when competitors are free to focus investment on more lucrative areas.

‘Royal Mail must drive top-line growth if it wants to return to profit, and a large part of that needs to come from winning back customers lost while industrial actions wreaked havoc. Early signs are positive, but there’s a long way to go.

‘For now, the chance of breakeven profit for IDS at the group level is entirely propped up by the international business, GLS, which continues to perform well.’

Shares in the owner of William Hill fell after the bookmaker warned plans to increase spending on artificial intelligence (AI) and marketing will hit profits.

With tighter regulations also taking their toll in the UK, gambling giant 888 expects its annual profit to come in towards the lower end of the £340m and £397m range pencilled in by analysts.

Shares sank 1.5pc, or 1.25p, to 79.75p, taking losses for the year to 17pc. The profit warning – its second since September – came as it said cost-cutting has freed up to £30m for AI and marketing.

Royal Mail-owner International Distributions Services achieved its best Christmas in four years in 2023, with revenues rising nearly 10 per cent during the festive quarter.

Royal Mail has suffered several setbacks over the past couple of years, including strikes by postal workers, a cyber security incident, a fine from regulator Ofcom for missed delivery targets and the loss of its 360-year monopoly to deliver parcels from post office branches.

Its turnaround plan has, however, progressed under the leadership of Martin Seidenberg, while customers it lost during the strikes in late 2022 have returned to the postal and parcels company.

IDS, which also operates GLS internationally, reported group revenue of £3.59billion for the three months to December-end, up 9.8 per cent year-on-year.

Boss Martin Seidenberg hailed a ‘marked improvement in both trading and operational performance for Royal Mail over Christmas’, adding that the group has ‘continued to win-back customers’.

He added: We need to build on this momentum. With Ofcom due to publish options for the future of the Universal Service imminently, now is the time for urgent action.

‘We are doing all we can to transform, but it is simply not sustainable to maintain a delivery network built for 20 billion letters when we are now only delivering seven billion.’

Sainsbury’s is planning a ‘phased withdrawal’ from its core banking business, with financial products and services sold by the group set to be provided by third-party firms in the future.

Chief executive Simon Roberts said:

‘We have been clear since we launched our Food First strategy in 2020 that we would concentrate our efforts on our core retail businesses and today’s announcement reflects that strategic focus.

‘It’s business as usual for now at Sainsbury’s Bank and there will be no immediate changes to products and services as a result of today’s announcement.

‘We will of course communicate directly to customers well in advance of any changes to their products and services.’