Currys lifts annual profit guidance after bid battle
UK electrical retailer Currys lifted guidance as it reported stronger-than-expected sales since the busy Christmas period.
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16:35 07/11/24
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The company, which also confirmed that it no longer faced takeover threats from Elliott Advisors and China’s JD.com, said pre-tax profit was now expected to be at least £115m, compared with previous guidance of £105-115m and would start the year with positive net cash.
“We’ve been working to get the Nordics back on track, while keeping up the UK & Ireland’s encouraging momentum," said cjief executive Alex Baldock.
"Both are progressing well, despite still-challenging markets, and we now feel confident to raise this year’s profit expectations to at least the top of our previous guidance. Stronger trading, selling more of the solutions and services that boost margins and build customers for life, and strong cost discipline have all been important."
US investment group Elliott last week ended its bid to buy Currys, after two offers were rejected. China’s JD.com revealed on Friday it will not make a bid, sending Currys shares lower.
“Currys’ latest trading update vindicates its decision to fight off takeover interest. The retailer argued Elliott’s bids undervalued the business, implying they didn’t reflect the progress it had made in turning its fortunes around. Currys is now punching its fists in the air by revealing that sales have been better than expected," said AJ Bell investment director Russ Mould.
“Investors would have been annoyed had it not delivered such a strong update as that would have strengthened the argument to accept a bid. After all, many investors are very short term in their thinking and only judge a company on quarterly performance."
“It's important to note the line ‘still-challenging markets’ in the trading update. That’s a reminder that Currys will have to work hard to keep growing profit. High interest rates and an uncertain economic backdrop equate to a cautious consumer who is watching every penny. Currys might want to lean harder on its services arm to encourage people to get broken electricals fixed as shifting new products is not going to be easy.”
Reporting by Frank Prenesti for Sharecast.com