Currys hikes profit forecast for second time this year

Currys boosted its annual profit outlook on Monday following better-than-expected trading in the past two months.

The electronics retailer now anticipates reporting adjusted pre-tax profits of at least £115million for the current financial year, against a previous forecast of £105million to £115million.

It is the second time this year that the London-based group has raised its earnings guidance, having done so in mid-January despite sales declining modestly over the peak festive period, which covered the ten weeks ending 6 January.

Currys also announced that the period for considering acquisition bids had ended after Chinese online shopping giant JD.com declared on Friday that it would not make any formal proposals.

Four days previously, private equity giant Elliot Advisers abandoned its pursuit of the retailer after Currys’ bosses rejected  two takeover offers by the Waterstones bookshop chain owner.

Since the festive period, the company has seen ‘positive’ sales and ‘robust’ gross margins in both its British Isles and Nordics divisions, as well as healthy growth at its services arm.

In addition, the FTSE 250 group said the disposal of its Greek and Cypriot business, Kotsovolos, is set to happen sometime during the first half of April.

Currys agreed last November to offload the division for £175million to Public Power Corporation, Greece’s biggest power generation supplier, and use the proceeds to pay down its debts. It expects to end the year with net cash of £97million.

Alex Baldock, chief executive of Currys, said: ‘We’ve been working to get the Nordics back on track while keeping up the UK and Ireland’s encouraging momentum.

‘Both are progressing well, despite still-challenging markets, and we now feel confident to raise this year’s profit expectations to at least the top of our previous guidance.’

Both deals, worth around £682million and £750million respectively, were turned down by Currys, which claimed they ‘significantly undervalued the company and its future prospects.’

One major Currys shareholder, JO Hambro Capital Management UK Equity Income fund, wanted the business to accept an offer of at least £1billion.

Russ Mould, investment director at AJ Bell, said Currys’ recent trading performance ‘vindicates its decision to fight off’ Elliot and JD.com’s approaches.

He added: ‘Investors would have been annoyed had it not delivered such a strong update as that would have strengthened the argument to accept a bid.

‘After all, many investors are very short-term in their thinking and only judge a company on quarterly performance.’

Currys shares were 3.45 per cent higher at 58.55p on Monday morning, although they have more than halved since the beginning of 2020.