Currys store on Oxford Street
Currys has upgraded its full year profit forecast following the end of takeover interest / Image source: Adobe
  • Recent sales better than expected
  • Full year PBT to be ‘at least’ £115 million
  • Greek disposal on track

Electricals retailer Currys (CURY) has upgraded its full year profit forecast for the second time in three months following the end of takeover interest from Elliott Advisors and (JD:NASDAQ), news that sparked a 4% share price rally to 59p.

In an unscheduled update, the washing machines, mobile phones and laptops seller said it has delivered stronger than expected sales since 7 January 2024 and expects adjusted pre-tax profit for the year to April 2024 will be ‘at least £115 million’ as a result.

That is ahead of the previously guided £105 million to £115 million range, vindicates Currys’ decision to fend off takeover interest from formidable US investment firm Elliott and demonstrates how its defiant stance also deterred Chinese e-commerce colossus firm from making a formal bid.


Currys’ upgrade reflects positive like-for-like sales over the January-to-March period in the UK & Ireland and the competitive Nordics, where the retailer’s recovery appears to be on track.

Gross margins remain ‘robust’, insisted the FTSE 250 retailer, which has also enjoyed continued strong growth in higher margin services. Management also noted that the disposal of Greek business Kotsovolos is on track to complete in the first half of April, which will result in Currys finishing the financial year in a net cash position.

Longer term, Currys continues to target adjusted EBIT (earnings before interest and tax) margins of ‘at least 3%’ with a focus on sustainable free cash flow generation.


Now under pressure to enliven the Currys share price, CEO Alex Baldock commented: ‘We’ve been working to get the Nordics back on track, while keeping up the UK&I’s encouraging momentum. 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,’ added Baldock.

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Liberum Capital said: ‘Recent potential bids have fallen away, yet further suitors cannot be ruled out. Bids aside, as a standalone investment case the current valuation remains far too cheap, giving no credit for any upside from current depressed earnings, especially as macro signs improve.’

According to AJ Bell investment director Russ Mould, Currys, which argued Elliott’s bids undervalued the business and failed to reflect its turnaround progress, is now ‘punching its fists in the air by revealing that sales have been better than expected. That gives it the confidence to say that full year profit will come at the top end of previous guidance.’

Mould added: ‘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. Fortunately for chief executive Alex Baldock, he’s been able to stump up the goods to show that Currys is doing perfectly fine on its own and doesn’t need to be swallowed up by a third party.’

However, Mould also noted 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.’

DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Martin Gamble) own shares in AJ Bell.


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Issue Date: 18 Mar 2024