Currys lifts profit hopes after suitors walk away
CURRYS has increased its annual profit outlook after investor hopes of a takeover tussle were dashed last week when two suitors walked away from bid talks for the electricals chain.
The retailer said recent trading has been better than expected, with likefor-like sales across the UK and Ireland and troubled Nordics division returning to growth since January 6, following sales declines over the all-important Christmas season.
It said group underlying pre-tax profits for the year to the end of April are now expected to be at least £115 million, up from the previous guidance for between £105 million and £115 million.
The group had already increased its profit guidance in January as cost savings helping offset sales woes.
The update follows heavy share slides last week after Waterstones owner Elliott Advisors pulled out of takeover talks, followed just days later by Chinese online retailer JD.com walking away from a possible bid.
The group had seen its shares boosted by the prospect of a bidding battle, but they fell more than 12% last week after the suitors retreated.
US activist investor Elliott Advisors had made two proposed offers for the company, the second of which valued it at about £757 million, with both having been rebuffed by Currys for being too low.
The investment management group said last Monday that Currys had rejected multiple attempts to engage with the board, so it would not be making a third bid.
JD.com, which claims to be China’s biggest online retailer, said last month it was considering a possible deal to buy Currys, but on Friday said it did not intend to make an offer.
Currys shareholder JO Hambro Capital Management UK Equity Income Fund had said earlier this month that the tech retailer should hold out for an offer of around £1 billion.
The bid interest had come amid an overhaul at Currys to focus on its core UK and Ireland business, with bosses striking a deal last year to sell its Greek and Cypriot arm for 200 million euros (£171 million) and taking action to turn around its loss-making Nordics division.
The retailer had seen sales fall 3% over the crucial Christmas period.