- Profit seen topping previous forecasts
- Cumulative 26% upgrade over 12 months
- Resumption of dividends on the cards
Electricals retailer Currys (CURY) pulled another rabbit out of the hat this morning with its third earnings upgrade of 2025 thanks to what it described as ‘continued robust trading’ in the UK and Ireland and a pick-up in growth in the Nordic region.
The shares, which have already put on more than 30% this year to hit a three-year high of 125p, edged higher again to 126p.
FINISHING ON A HIGH
For the financial year to 3 May 2025, Currys expects adjusted pre-tax profit to be around £162 million, a small upgrade from its previous forecast of £160 million, and sees ‘significant’ growth in free cash flow thanks to lower interest costs and tight working capital management.
The group also reported like-for-like sales growth had accelerated in the period following its peak selling season over Christmas and the New Year, which together with its robust financial performance and year-end net cash position of £180 million means it is on track to resume dividends.
The UK and Ireland saw like-for-like sales rise 4% in the 17 weeks since the start of this year, which together with improvements in the gross margin meant it was able to offset higher input costs.
The Nordic region, which had previously been a drag, also saw an acceleration in growth from the turn of the year despite a ‘still challenging’ market, and also managed to improve gross margins allowing it to offset higher costs.
Currys has been a running Shares Great Idea since March 2024, when we picked the stock at a tad over 60p.
‘We finished another year of strengthening performance on a high note with encouraging momentum and accelerating sales growth in both the UK and Ireland and the Nordics. In both, we’ve grown profits by delivering sales growth, market share gains and gross margin increases. In the Nordics, we’ve also shown especially strong cost discipline in a still-challenging market,’ commented chief executive Alex Baldock.
EXPERT VIEW
The team at Panmure Liberum drew attention to Currys’ cumulative 26% upgrade in pre-tax profit forecasts over the past 12 months as well as its large cash pile, which at £180 million is more than double the forecast a year ago.
‘There is much to be optimistic about: trading continues to improve, share gains are evident, and there are early signs of a replacement cycle returning in the computing and gaming categories—none of which are currently embedded in our forecasts,’ say the analysts.
Meanwhile, although the Nordic market remains challenging, confidence is returning as rates fall and ‘this could be an area of further surprise in the current financial year,’ they add.
In terms of valuation, despite the rally year-to-date, the shares are on a ‘very undemanding’ rating of 11.4 times current earnings with a 9% free cash flow yield say the team.
