Currys in £75m share buyback as sales soar past 2019 levels

Electrical retailer Currys on Thursday announced a £75m share buyback as group organic sales jumped 15% from pre-pandemic 2019 levels on the back of continued demand for products such as laptops and video games during lockdowns.

Currys, which formerly known as Dixons Carphone, said it had put measures in place to mitigate supply chain disruption and labour shortages.

It reaffirmed consensus forecasts for full-year pre-tax profit of £161m and said it expected to deliver a “robust” peak Christmas trading period.

"Sales were very strong at the start of the period as we saw pent up demand from customers choosing to shop in stores after extended lockdowns but strong two-year growth has continued through the summer and into the autumn," Currys said in a statement.

“Our medium-term guidance for 4% EBIT margin and over £1bn cumulative free cash flow by 2023/24 remains unchanged. By that year we expect the group to be generating over £250m of annual sustainable free cash flow.”

It added that 2021/22 capital expenditure would be £20m, compared with previous guidance of £190m.

However, business remains 1% below the same period a year ago, when demand surged as households looked to update their in-home technology while working from home during various lockdowns.

In the UK and Ireland like-for-like sales were up 11% compared with two years ago, with strong growth in electricals offsetting falls in mobile sales. Compared with 2020 sales were down 3%.

Electricals soared 21% on a two-year basis and were down 1% on last year, the company added, including strong sales in the spring when stores reopened in April. Sales in its Nordic and Greece divisions were up 19% compared with two years ago.

AJ Bell investment director Russ Mould said Currys faced a challenge from slowing demand for "computer equipment from people working from home for the first time and those who got seriously into their gaming during lockdown".

“The other is that consumers are set to start feeling the pinch in a bigger way as the cost of energy, food, fuel and mortgages goes up," he said.

“These pressures are not distracting Currys from its medium-term goals on cash flow and profitability and the company has demonstrated some confidence in the outlook by sanctioning a buyback."