Electricals retailer sank to the bottom of the FTSE 250 leaderboard despite announcing a double-digit profits pickup in the last financial year.
At 72.2p per share, Currys’ share price was last 5.1% lower in Thursday business.
Revenues dipped 4% to £8.5 billion in the 12 months to April, which the company attributed to “high inflation and rising interest rates [that] caused weak consumer confidence and depressed demand.”
On a like-for-like basis, sales were down 2% year on year. However, Currys said it had seen “trading momentum improving throughout the year.”
Turnover was especially weak in Currys’ Nordics territory. At £3.5 billion, sales dropped 8% year on year, or 3% on a like-for-like basis.
In the UK and Ireland, both reported and like-for-like sales were down 2%, at £5 billion.
Despite these weakening sales, Currys’ adjusted pre-tax profit improved 10% year on year to £118 million. The bottom line was boosted by a 20-basis-point improvement in its underlying operating margin, to 2.4%.
In the UK, Currys said that margin improvements “were driven through higher adoption of services and solutions, better monetisation of our improved customer experience, a focus on more profitable sales, and cost savings.”
The business finished the year with net cash of £96 million on the books following the divestment of its Greek operations. It had recorded net debt of £97 million at the end of financial 2023.
Strengthening sales
Chief executive Alex Baldock commented that “our performance continues to strengthen. We’ve kept up our encouraging momentum in the UK & Ireland, our Nordics business is getting back on track, and we’re stronger financially.”
He said that “continued growth in sales of solutions and services were particular highlights: they’re good for customers, margins and recurring revenues, and they lean on Currys’ competitive strengths.
Baldock added that “we’re planning prudently but confidently for the year ahead, on course to grow both profits and cashflow while carefully stepping back up to more normal investment levels.”
Currys said that trading is currently in line with expectations, and that it is targeting “continued growth in high margin, recurring revenue services” in the new year.
This includes growing the number of subscribers at its iD Mobile network operator to 2 million. It ended financial 2024 with 1.8 million subscribers, up 34% year on year.
Bouncing back
Analyst Mark Crouch of eToro commented that “Currys looks to have been handed a new lease of life in recent months. After being the subject of takeover interest from big hitters in the US and China, the British electricals retailer has since been rejuvenated.”
The business rebuffed two offers of £700m and £757m from US investment firm Elliott Advisers at the start of the year. It also attracted interest from e-commerce giant JD.com before the Chinese company cooled its interest.
Crouch noted that “like-for like sales have returned to growth, so the group is confident in maintaining this trend for the year ahead, and following the sale of its Greek operations, the business now sits on a strong cash position.”
However, he added that “fierce competition from online retailers is still a significant threat though, so it might require a change in strategy if Currys is to outmanoeuvre their rivals in the long run.”
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