- UK & Ireland like-for-likes up 5%
- Gains in UK and Nordics
- Post-Budget price rises ‘inevitable’
Shares in electrical retailer Currys (CURY) topped the FTSE 250 leader board on 12 December, surging 11.5% higher to 88p after the firm reported a rise in first-half profits and a return to sales growth for the core UK & Ireland business despite a tough consumer backdrop.
Buoyed by rising demand for AI laptops and with the Christmas season in full swing, Currys said it expected to grow profits and cashflow as promised this year, though the retailer warned customers face ‘inevitable price rises following the recent Budget.
SPARKY UK PERFORMANCE
For the half ended 26 October, the TV-to-mobile-phone seller delivered a 1% rise in group revenue to £3.9 billion and like-for-like sales growth of 2%.
Like-for-likes were down 2% in the Nordics, but this was offset by a positive performance in the main UK & Ireland business where like-for-likes jumped 5% amid firm market share gains.
Despite cost pressures, adjusted operating profits rose more than 50% in both the UK and Nordic regions thanks to margin gains and robust sales, helping Currys swing from losses of £16 million to adjusted pre-tax profit of £9 million.
ANALYSTS PLUG IN UPGRADES
Currys said current trading had been in line with management expectations and reiterated its guidance for growth in profits and free cash flow for the year leading analysts to nudge up their earnings estimates.
Berenberg upgraded its full year 2025 adjusted pre-tax profit estimate by 4% to £145 million driven by ‘a lower total interest charge, reflecting the improved balance sheet and lower lease liabilities. This more than offsets the impacts of cost rises from the recent UK Budget announcement.’
WHAT DID THE CEO SAY?
‘We’re very encouraged by our progress,’ said chief executive Alex Baldock. ‘Currys’ performance continues to strengthen, with profits and cashflow growing significantly, and the group’s balance sheet is strong. In the UK & Ireland, we made big improvements to both online and stores channels, customers continued to take more of the solutions and services that are valuable to them and to us, and such growth drivers as B2B and iD Mobile performed well.’
Baldock insisted Currys expects to grow profits and cashflow this year ‘despite new and unwelcome headwinds from UK government policy. These will add cost quickly and materially, depress investment and hiring, boost automation and offshoring, and make some price rises inevitable.’
EXPERT VIEWS
Julie Palmer, partner at Begbies Traynor (BEG:AIM), stressed Currys was ‘not completely out of the woods and the latest measures from the government won’t help as changes to National Insurance Contributions and the national minimum wage bite next year.
‘As we approach the all-important Christmas period, Currys will be hoping this momentum continues, but the jury is still out on whether this is a business in full recovery mode and, with consumer confidence shaky at best, it’ll be very interesting to see how it performs in early 2025. For now, the early signs are promising.’
Dan Coatsworth, investment analyst at AJ Bell, observed that the introduction of AI laptops has created a new ‘must-have’ electronic product category, driving consumers to upgrade their hardware. ‘Demand is growing for these products and Currys is laughing all the way to the bank,’ said Coatsworth.
‘As more AI facilities are rolled out across phones and laptops, consumers will want to make sure they have devices with enough power to get the most out of this technology.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Ian Conway) own shares in AJ Bell.
