- Greece disposal boosts balance sheet
- Nordic profits set to double
Tech retailer Currys (CURY) had a pleasant surprise for investors in its latest update: it reported a return to growth in the 16 weeks ending 27 April, with sales up 2 per cent on a like-for-like basis.
Only a few months ago, the company was subject to a takeover bid by hedge fund Elliott Advisers, which ultimately backed down after the board rejected two of its approaches. China-based retailer JD.com was also said to be mulling an offer of its own in February, although this didn’t come to fruition either.
The flurry of buyout interest followed a difficult period at Currys, in which cost-conscious consumers shunned electrical goods, and the balance sheet suffered as a result. The recent disposal of the group’s Greek division for an enterprise value of £175mn will have helped in this regard. However, the renewed customer interest was the main driver of the update’s guidance upgrades.
“We understand that the group finished the year in a ’normal’ working capital position, implying that a good portion of the beat vs consensus has been driven by the group’s strong trading momentum, as well as continued tight cash management,” Liberum said.
The retailer's bosses are now expecting an adjusted pre-tax profit figure of £115mn-£120mn for the full year – up from previous guidance of “at least £105mn”. The group also anticipates that adjusted pre-tax earnings in the Nordic countries will more than double year on year. This marks a return to form for the region, which underperformed last year and contributed to a cut in the final dividend.
However, investors now appear convinced that operational difficulties are a thing of the past. The shares are up nearly 45 per cent in the year to date, having gained 8 per cent on the back of this full-year update.
Last IC view: Hold, 47p, 6 Jul 2023
