Currys profit guidance is lifted after sales growth
CURRYS has lifted profit guidance for the year as the electronics chain announced improving sales in recent months after shrugging off foreign takeover interest.
The group said pre-tax profit is expected to be at least £115 million in the year ending April 27, versus £119 million in the previous year.
It lifted guidance from previous analyst expectations of £105 million, as the chain appeared to turn a corner following a period of underwhelming sales.
The retailer, which sells everything from TVs and mobile phones to kettles and dishwashers, has previously flagged that its customers were feeling the effects of the cost-of-living crisis.
This was leading to slower demand for its big-ticket items as people held off making more expensive purchases.
Profits are expected to be £115 million to £120 million for the year, as like-for-like sales grew 2% for the 16 weeks to April 27 versus the Christmas period.
Like-for-like sales for the year are expected to have dropped 2% compared to the previous 12 months.
Currys added that cost savings made across the group were “more than offsetting inflation” while its year-end net cash position is expected to be around £95 million.
The company was in sharp focus earlier this year when it looked to be at the centre of a bidding battle between US group Elliott Advisors and Chinese retail giant JD.com
But any hopes of a takeover were dashed when the two potential suitors walked away from discussions.
Elliott Advisors said it ended its efforts following “multiple attempts to engage with Currys’ board, all of which were rejected”, including a takeover approach worth more than £750 million.
Currys said it felt Elliott’s proposals were too low and did not reflect its value.
Chinese retail giant JD.com said it had also been considering making a bid but in the end decided not to.
The bidding interest came at a time that Currys was undergoing an overhaul as it focused efforts on its business in the UK and Ireland, having struck a deal to sell its Greek and
Cypriot arm last year.
Meanwhile, turnaround efforts in its loss-making Nordics business appear to be on track, with earnings expected to more than double yearon-year.
Like-for-like sales were flat yearon-year for the second half of the year in the Nordic countries, Currys said.
Alex Baldock, Currys chief executive, said: “Our performance is strengthening, with good momentum in the UK and Ireland, and with the Nordics getting back on track.
“Sales are now growing again, margins are benefiting from higher customer adoption of solutions and services, and cost discipline is good. All this means improved profits and, with our strong cash position, we’re well set up for the year ahead.”