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Shares in electricals retailer Currys took off on Thursday as sales strengthened in the first half and the business firmed up its balance sheet.
At 86p per share, the FTSE 250 firm rose 8.9% and was the index’s biggest daily gainer.
Strength Currys’ its main UK and Ireland market meant group revenues rose 1% in the six months to October, to £3.9 billion. On a like-for-like basis sales were up 2% year on year.
The business remained in the red during the period, although pre-tax losses narrowed to £10 billion from £44 billion in the same 2023 period.
Free cash flow improved to £50 million from £4 million previously. And Currys swung from a net debt position of £129 million to net cash of £107 million.
Mobile Stands Out
Thanks to what it described as “[a] strong performance from Mobile and our B2B business,” Currys’ sales in UK and Ireland rose 6% to £2.3 billion, or 5% on a like-for-like basis.
Currys described its iD Mobile network operator as “the standout performer this year,” with customer numbers soaring 32% year on year to 2 million.
Thanks to rising share across its stores, market share in the UK and Ireland increased 20 basis points year on year.
Market share for its shops rose 180 basis points, but online share dipped 10 basis points.
Strength in its home market offset a 5% decline in Nordics revenues, to £1.6 billion. Like-for-like sales declined 2%.
Currys said that it grew market share by 40 basis points in what it described as “[a difficult consumer demand environment.”
The retailer said that “trading since the period end has been consistent with the board’s expectations,” leading it to keep full-year guidance unchanged.
Encouraging Results
Chief executive Alex Baldock said that “we’re very encouraged by our progress,” adding that “Currys’ performance continues to strengthen, with profits and cashflow growing significantly, and the group’s balance sheet is strong.”
He added that “looking ahead, we’re confident of continuing our progress, and expect to grow profits and cashflow as promised this year.”
However, Baldock said that National Living Wage increases and higher National Insurance contributions from employers would add £32 million to full-year costs.
He noted that these measures would “add cost quickly and materially, depress investment and hiring, boost automation and offshoring, and make some price rises inevitable.”
“Turned A Corner”
Analyst Mark Crouch of eToro said that Currys’ results “suggest that the home electronics retailer has firmly turned a corner. After grappling with falling profits and a weakening balance sheet in recent times, today the company finds itself in a much stronger position.”
He added that “heading into the critical Christmas period, shareholders are likely to feel optimistic about a strong end to the year. Although online-only retailers remain a significant threat, Currys has made notable progress in this area, while winning back market share, particularly in the Nordic region, and demonstrating strict capital discipline by reducing debt.”
