Currys lifts full-year profit expectations

Electricals retailer Currys lifted its full-year profit expectations on Tuesday as it hailed a return to like-for-like sales growth.

In an update for the year to 27 April, the company said group LFL sales returned to growth, up 2% in the 16 weeks since the peak trading period.

Full-year pre-tax profit excluding the Greek business is now expected to be between £115m and £120m, up from previous guidance of "at least" £105m.

Adjusted earnings before interest and tax for the UK & Ireland are expected to be in line with consensus. Currys noted improved trading momentum, with LFL sales up 2% since the peak trading period and cost savings more than offsetting inflation.

As far as the Nordics business is concerned, EBIT is expected to more than double year-on-year, ahead of consensus. Currys said that in a challenging market, post-peak period LFL sales rose 2% against a weak period last year.

Chief executive Alex Baldock said: "Our performance is strengthening, with good momentum in the UK&I, and with the Nordics getting back on track.

"Sales are now growing again, margins are benefiting from higher customer adoption of solutions and services, and cost discipline is good. All this means improved profits and, with our strong cash position, we're well set up for the year ahead."

At 0925 BST, the shares were up 9.5% at 71.52p.

Russ Mould, investment director at AJ Bell, said: "Rejecting a takeover bid comes with its own pressure so the fact Currys has upgraded profit guidance in the wake of batting off foreign interest is helpful to management’s credibility. Significantly, the shares are now trading above recent suitor Elliott’s top bid.

"The company is showing real signs of recovery - the recent momentum in its UK and Ireland business now finally being matched by the Nordics which are getting back on track under a new leadership team.

"After benefiting from the pull-forward of spend on TVs, laptops, printers and household appliances engendered by the pandemic, the post-Covid backdrop has been tougher for Currys.

"Persistent inflation and rising rates have put the squeeze on consumers’ discretionary spending, and the Scandinavian business, a previously reliable contributor, going wrong only compounded matters.

"Currys deserves some credit for digging itself out of this hole and is really playing into its role as a provider of accompanying services alongside the sale of consumer electronics. This is logical as many people are not hugely tech savvy and if Currys can make itself a trusted provider of expertise and support it could drive customer loyalty and useful ancillary revenue.

"The company still remains at the whim of consumer demand but with the sale of its Greek operations helping to put it in a net cash position, Currys is well positioned for anything the economy might throw at it."