Currys share price soars as profit guidance lifted after trading ‘better than expected’
Currys has lifted its prospects for the rest of the year, saying its profit before tax is expected to be £110-120m, up from previously around £104m.
Shares in the retailer jumped almost six per cent to 59.45p following the announcement this morning, to their highest level since early April.
Currys, which sells everything from computers and hoovers to TVs and fridges, also said prospects for its net debt had been narrowed from £150m to £100m.
It said that UK trading had been “been better than expectations, especially in the final two months of the year”, despite year-on-year sales for the first five months being 10 per cent down.
The group continues to grapple with the impact of the cost of living crisis on Brits spending habits, which has hit the firms share price over the last year.
The electricals retailer had previously lowered its profit expectations in March, primarily due to a weakened performance from the Nordic section of the business, which has faced heavy competition from local rivals offering cheap discounts.
A structural shift following the poor performance saw regional CEO Erik Sønsterud step down.
CEO Alex Baldock said at the time, “our Nordics performance is not where we want or expect it to be. The intensity of competition may be unrelenting, but we’re no stranger to tough markets and aggressive competitors.”
The retailer said today that the environment remains “challenging, but under new management we have made progress on margins and costs.”
Its Nordic contingent saw like-for-like sales down 12 per cent this half.
Richard Hunter, Head of Markets at interactive investor, said “a brief but positive update has provided some respite for a beleaguered share price, with a profit upgrade propelling the shares higher.”
“Currys may be winning the battle but it has a considerable way to go to win the war. The Nordics region in particular remains under pressure.”
He added: “The Nordics account for over 40 per cent of group revenues, where new entrants to the space have relied on heavy discounting of goods to announce their arrival, partly driven by excess stock which they are now selling at basement (and virtually unprofitable) prices.”
Analysts said that in the international division, double-digit improvements in Greece were not enough to offset the double-digit decreases in the Nordic countries.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown said: “investors gave some early cheer to the better-than-expected display in the UK and Ireland.”
“But in the Nordic regions, it’s a different story. It’s the group’s second largest segment, and trading environment remains extremely challenging. “
More detailed full year results are expected on 6 July 2023.