Electricals retailer Currys lifts full-year profit guidance
Currys raises full-year earnings outlook after better-than-expected UK and Ireland trading
- Currys now expects annual adjusted pre-tax profit of £110m to £120m
- It is struggling with difficult trading conditions in the Scandinavian countries
- Shares of the group were the best riser in the FTSE 350 Index on Monday morning
Currys has raised its annual profit forecast after stronger-than-expected sales in the British Isles.
The electronics retailer, formed from the merger of Dixons Retail and Carphone Warehouse, now forecasts adjusted pre-tax profit of between £110m and £120m for the 12 months ended April 29.
In March, the company cut its full-year profit forecast to around £104 million due to difficult trading conditions in the Nordics.
Outlook: Electrical retailer Currys now forecasts adjusted pre-tax profit of between £110m and £120m for the 12 months ended April 29
While acknowledging that the consumer situation in the region remains challenging today, the company said progress was being made in eliminating £25 million in annual costs.
Currys outperformed expectations in the UK and Ireland, particularly in the final two months of the fiscal year, and now expects underlying earnings in the area to be up more than 40 percent.
The London-based retailer also reported that net debt stood at around £100m at the end of April, which is at the lower end of its earlier forecast of up to £150m.
Curry’s Stocks jumped 5.45 percent to 59 pence on Monday morning, making them the best riser on the FTSE 350 index.
However, they are still down about 58 percent in the past two years.
The company’s new earnings outlook remains significantly lower than last year’s £186 million, when it benefited from a resurgence in retail purchases and drastic cost-cutting measures.
Currys warned last summer that profits would be lower going forward as the cost of living forced consumers to cut back on non-essential goods.
In addition, the Scandinavian operations suffered from excess inventory after prices remained flat, while demand for goods slowed and rivals discounted sharply.
Russ Mould, director of investment at AJ Bell, said: “For a long time, the Nordics arm just quietly did business for Currys and served an affluent customer base, but what initially appeared to be a short-term problem of competitors discounting excess inventory is a lingering problem. become.’
Amid this turmoil, Erik Sønsterud stepped down as the company’s chief executive in the region in March, with chief operating officer Fredrik Tønnesen replacing him.
Online sales of electrical products boomed during the early stages of the Covid-19 pandemic, as lockdown restrictions and the growth in home workers led people to buy more laptops, televisions and other home appliances.
Currys’ like-for-like sales have fallen in each of the past two fiscal years since those curbs were lifted, including by 7 percent last year.
“While the improvement in earnings for the electronics retailer is a welcome development, it continues to struggle in a difficult environment for retailers,” noted Adam Vettese, an analyst at trading platform eToro.