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Euronics Expects Decline in Demand

Retail

Despite market challenges, Euronics closed its 2022-2023 financial year with stable growth in turnover and an increase in its online market share. However, according to the company, demand is expected to decline this year.

Overall, Euronics closed its 2022-2023 financial year with a 12.5% increase in revenue. Offline sales increased by 12.8%, while sales from its webshop grew by 9.5%. November and December were the company's biggest sales months, with sales of smartphones, televisions larger than 55 inches, sub-fridge combination refrigerators, dryers and washing machines contributing to the result.

Euronics achieved growth despite the fact that, while the second half of last year saw strong sales growth, peaking during the festive season, GfK data show that this trend was reversed in January 2023, and that the first half of this year has already seen a negative impact of inflation and falling real wages across the entire segment.

"GfK's data for the last year shows that the overall technical market is stagnating, so we consider it a success that we have maintained a stable market share despite declining purchasing power and inflation, while our sales have also increased," said Bálint Fazekas, Euronics' commercial managing director. "In addition, our online shop is becoming increasingly important in the market: in 2022, we became the country's largest 100% Hungarian-owned online shop for the second time, and our online market share has increased by 19% in the last 12 months compared to a year earlier."

"We expect inflation to continue to have a negative impact on demand. As real wage growth has not tracked inflation, the priority for families is to purchase essential everyday items. We know that electronics are not necessarily at the top of this list. That is why we expect that in the coming period, purchases of electronics will either be made at lower price levels or shifted in time to the sales periods," added Fazekas.

In anticipation of these challenges, Euronics has in recent years started to sell not only traditional technical goods but also product categories such as sports equipment, gardening and DIY tools, toys, household consumer goods, and baby and mum products in its stores and online shop.

Euronics is expecting conscious purchasing decisions and restrained spending during the fall and Christmas period, i.e. a reduction in both sales and unit sales compared to previous years.

"However, we expect sales to pick up in the second half of this year compared to the first half. We expect that the results of our online and offline developments and expansions will then be reflected in the figures. Our experience has shown that shoppers are returning to our stores more and more, so we are putting the emphasis back on in-store," Fazekas noted.

"A few months ago we opened our flagship store in Budaörs, which has been completely redesigned from our customers' point of view to meet all their needs and provide an outstanding customer experience, and this year we will renovate 22 of our stores, open Euronics stores in four new locations and soon enter the international market," he added.

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