ii view: confident Currys believes it can maintain momentum

First-quarter trading update to 30 August

• Group-wide like-for-like sales up 3%
• UK & Ireland like-for-like sales up 3%
• Nordic like-for-like sales up 2%
• New £50 million share buyback programme

Guidance:

• Expects full-year adjusted profit of £170 million, potentially up from £162 million over last financial year
• Expects further growth in higher profit margin recurring revenue services such as mobile phone service provision
• Targeting ID mobile phone subscribers of 2.5 million, up from over 2.3 million

Chief Executive Alex Baldock commented:

"It's been a good start to the year, with encouraging performance across the Group. In the UK&I we're pleased with the trajectory in our growth areas of new categories, B2B and the Services that are so valuable to customers and to Currys. 

"Our Nordics recovery continues to pick up pace. We continue to grow, improve margins and control costs well. We're confident that profit margins will step forward again this year.  

"We're working to deliver an ever-improving experience for colleagues, for customers and for shareholders, as reintroducing the dividend and now starting share buybacks shows. We're on a good track at Currys, with growing momentum. We're determined to keep it up and believe we can."

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ii round-up:

Currys (LSE:CURY) trades across 708 stores and online in six countries including the UK.  

The FTSE 250 index constituent trades under the Currys and Mobile iD brands in the UK and Ireland and Elkjøp in the Nordics. 

For a round-up of this latest trading update announced on 4 September, please click here.

ii view:

Formerly Dixons Carphone, Currys today employs around 24,000 people. Group operations include one of Europe's largest technology repair facilities, a sourcing office in Hong Kong and an extensive distribution network, centred on Newark in the UK and Jönköping in Sweden. Geographically, the UK & Ireland made most sales over its last financial year at close to three-fifths. That was followed by Sweden at 13%, Norway 12% and other Nordic countries the balance of 17%. 

For investors, US trade tariffs pushing companies such as Apple Inc (NASDAQ:AAPL) to invest in US suppliers are potentially squeezing costs and therefore product prices higher. Wages for the group’s core UK operations have increased following government tax changes. The sale of its Greek business has reduced geographical diversity, while a forecast price/earnings (PE) ratio above the three- and 10-year averages may suggest the shares are not obviously cheap.

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More favourably, key measures such as market share, like-for-like sales and profits are all improving. New AI-aided products may support a wave of product upgrades. A store portfolio offers consumers the opportunity to test products and lean on the knowledge of staff before buying, while increased free cash flow of £149 million and up from £82 million previously, now support a forecast dividend yield of 1.7% and a new £50 million share buyback programme. 

On balance, and given previously rejected takeover approaches and a consensus analyst fair value estimate above 150p per share, investors clearly believe this multichannel retailer could reward them further.

Positives

• Reduced staff pension deficit
• Back paying shareholder returns

Negatives

• Tough economic backdrop
• Possible impact from US trade tariffs

The average rating of stock market analysts:

Buy