Shares of electrical retailer Currys experienced a significant surge on Thursday, with the stock rising by 8.9% to 86p per share. This rally came on the back of positive sales trends in the first half of the fiscal year and an overall strengthening of the company’s balance sheet. In the six months leading to October, group revenues reached £3.9 billion, reflecting a 1% increase, while like-for-like sales rose by 2% year-on-year. Despite still being in the red, Currys managed to narrow its pre-tax losses substantially from £44 billion in the same period the previous year to £10 billion.
Currys’ performance was particularly bolstered by a solid showing in its core UK and Ireland market, where sales climbed 6% from the previous year to £2.3 billion, or 5% on a comparable basis. The company spotlighted its iD Mobile network as a standout performer, boasting a remarkable 32% growth in customer numbers to 2 million. This gain contributed to an increase in market share in the UK and Ireland by 20 basis points year-on-year, and while online market share saw a slight decline, overall growth in the bricks-and-mortar segment was noted.
On the other hand, revenue from Currys’ Nordic operations did not fare as well, displaying a 5% decline to £1.6 billion, with like-for-like sales down by 2%. Nonetheless, there was still some positive news from the region, as Currys managed to gain market share by 40 basis points, even amid a challenging consumer demand landscape. The company maintained that its trading performance since the period’s end aligns with the board’s expectations, leading to an unchanged full-year guidance, suggesting confidence in sustaining growth.
Chief Executive Alex Baldock expressed optimism about the company’s trajectory, indicating that both profits and cash flow continue to improve alongside a strengthened balance sheet. However, he did point out that the anticipated increases in the National Living Wage and National Insurance contributions from employers would lead to an additional £32 million in full-year costs. Baldock acknowledged that these changes would impact investment and hiring substantially, prompting potential price rises as a necessary response.
Market analysts have begun to view Currys’ improving performance in a more optimistic light. eToro analyst Mark Crouch noted that recent results demonstrate that Currys has effectively turned a corner after facing challenges related to dwindling profits and a fragile balance sheet. With the holiday season approaching, there is a sense of cautious optimism among shareholders regarding a potential robust ending to the year. While competition from online-only retailers remains a formidable threat, Currys has shown resilience and progress, particularly in regaining market share in the Nordic markets and showcasing stringent capital discipline to reduce its debts.
In summary, Currys is navigating a path toward stabilization and growth, bolstered by sector strengths and strategic operational improvements. Although there remain challenges stemming from increased wage pressures and competitive online markets, the company’s recent performance reflects a commitment to overcoming these hurdles while sustaining financial health. With expectations set high for the festive season, it appears that Currys is well-positioned to capitalize on its recent momentum and deliver positive results in the near term.
