Currys FY profit to beat market expectations after 'very strong' peak trading

(Sharecast News) - Electricals retailer Currys said on Wednesday that full-year profit was set to beat market expectations after "very strong" trading over the peak Christmas and new year period. In the 10 weeks to 10 January, group sales rose 6%, with sales in the Nordics up 12%, while the UK & Ireland saw a 3% increase.

Currys referred to its performance in the Nordics as "standout", with market shares gains in a "buoyant" market and sales growth across all categories.

The company now expects full-year adjusted pre-tax profit of between £180m and £190m, up 11% to 17% on the previous year - including "significant" growth in adjusted EBIT for the Nordics - and above consensus expectations of £180m.

Chief executive Alex Baldock said: "We're pleased with our very strong trading over Peak, growing sales healthily and in a disciplined way. We now expect this year's profits to exceed market expectations, to keep returning cash to shareholders and finish the year with more than £100m net cash.

"Our Omnichannel model is winning. We gained market share in both UK&I and Nordics, in both stores and online, and our fastest growth was where customers use both channels together. This is a competitive advantage we'll keep building.

"In the Nordics, which represents over 40% of our business, the market continued to recover, and we grew sales in every category, and every country. Along with sales growth, we've kept our hard-won margin and cost discipline which are producing substantial growth in profits and cashflow, a fitting reward for the team's great work in building a sustainably stronger business."

At0940 GMT, the shares were up 5.8% at 132.70p.

Dan Coatsworth, head of markets at AJ Bell, said: "Currys is a rare UK retail success story of recent years with an impressive recovery for the business from its 2023 nadir.

"As its festive update amply demonstrates, there is no sign of that letting up as the company delivers yet another upgrade.

"Unlike many of its retail peers Currys shaped up reasonably well during the Covid period as people took the opportunity to upgrade the electronic goods in their home. On the flipside, this left it particularly exposed as households which had already upgraded their kit felt less willing and able to spend as inflation surged coming out of the pandemic. A slowdown in its traditionally strong Nordics business only compounded problems.

"An opportunistic takeover bid in early 2024 from US investor Elliott tested the resolve of management but having rebuffed this approach, Currys has hardly looked back.

"As specialist and non-specialist competitors have exited the stage Currys has been left as the last electronics retailer of scale. Market share gains in both the UK and Scandinavia are driving impressive levels of growth in a subdued economic environment.

"As consumer electronics become more complex and harder for people to navigate, Currys has leaned into its strengths, looking to provide customers with support and guidance and help customers navigate a fast-changing world of consumer technology.

"This provides people with limited tech expertise with something they can't get elsewhere when they are purchasing a new TV or laptop.

"It aims to offer this support through the full lifecycle of a product from purchase, credit and installation to repairs and recycling when it has reached the end of its useful life, thereby potentially generating regular revenue from the sale of a single item."