- Market share gains in UK and Nordics
- Strong recurring services revenue growth
- Comfortable with £170 million consensus
Shares in Currys (CURY) sparked up 19% to a two-year high of 129.7p after the technology products retailer reported a strong start to the year and showed confidence in its growth prospects and cash generation by launching a new £50 million buyback on top of a previously announced £25 million dividend.
The FTSE 250 retailer has concluded a review of its pension scheme much earlier than anticipated and on better-than-expected terms, which has freed up a significant amount of cash flow for reinvestment in the business and capital returns to shareholders.
Benefiting from its position as one of the few surviving specialist retailers of electronic goods with a physical presence, Currys’ first-quarter like-for-like sales performance beat expectations.
And with the washing machines-to-laptops seller well-positioned heading towards Christmas, Currys left its full-year 2026 profit guidance unchanged.
POSITIVE MOMENTUM PERSISTS
Despite tough comparatives, Currys’ UK & Ireland like-for-like sales grew by 3% in the 17 weeks to 30 August with strength in gaming, AI computing, large appliances, coffee machines and cooling products more than compensating for declines in TVs, tablets and air fryers.
The recovery of Currys’ Nordics business continued with 2% like-for-like revenue growth driven by AI computing and success in new categories such as robotic lawnmowers and vacuums.
Currys’ top-line growth was also driven by areas offering strong recurring sales including business-to-business revenue and growth in iD Mobile network subscribers.
WHAT DID BALDOCK SAY?
Expecting to close the financial year with at least £100 million net cash in the coffers, Currys is ‘comfortable’ in delivering the £170 million of pre-tax profit called for by the consensus, implying 5% year-on-year growth.
‘In the UK & Ireland we’re pleased with the trajectory in our growth areas of new categories, B2B and the Services that are so valuable to customers and to Currys,’ said chief executive Alex Baldock.
‘Credit was notably strong, and iD Mobile is on track to beat the 2.5 million subscriber target we set for this year. Our Nordics recovery continues to pick up pace. We continue to grow, improve margins and control costs well. We’re confident profit margins will step forward again this year.’
LOOK TO THE FUTURE NOW
Begbies Traynor’s (BEG:AIM) Julie Palmer said ‘after many years of playing catch-up, Currys is now able to look to the future. The retailer’s Nordics business is on the road to recovery, helped by strong demand for AI computers. Meanwhile, its UK division has been buoyed by air conditioner sales this summer as it lays down strong foundations by also increasing its recurring services revenue.’
AJ Bell investment director Russ Mould said: ‘Management’s decision to hold firm in the face of a £700 million bid from US suitor Elliott 18 months ago looks more and more sound, with the company now valued by the market at more than double that sum.’
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.
