Currys shares soar as retailer lifts earnings guidance again

Currys Shares Surge as Retailer Boosts Profit Forecast Again

Shares in Currys, the consumer electronics retailer, experienced a significant surge on Thursday following the company’s second upward revision of its profit outlook this year. This positive adjustment reflects robust trading and heightened investor confidence in the business. The Currys share price jump underscores the company’s strong performance and optimistic future prospects in the consumer electronics market.

Revised Earnings Expectations

The London-based firm had previously increased its earnings outlook in January, citing robust sales during the Black Friday and Christmas shopping seasons. Building on this momentum, Currys announced a further improvement in its financial forecasts, signaling continued strong performance.

According to the latest report, trading has remained ‘robust’ since the initial revision, with the company reporting ‘positive’ like-for-like revenue growth across its operations in the UK, Ireland, and the Nordic countries. This consistent growth has prompted the retailer to elevate its profit projections once more.

Updated Profit Guidance

The electronics retailer now projects its adjusted pre-tax profits for the 53-week period concluding on May 3rd to reach approximately £160 million. This revised figure represents an increase from the previous guidance range of £145 million to £155 million, indicating a notable improvement in anticipated financial performance.

Stock Market Reaction

Following this announcement, Currys’ shares witnessed a substantial increase, climbing by 14.2 percent to reach 101.6 pence by late morning trading. This impressive surge positioned Currys as the top-performing stock within the FTSE 250 index, demonstrating strong market approval of the company’s improved outlook.

Background and Takeover Interest

Currys experienced a resurgence in sales growth in early 2024, coinciding with initial takeover approaches from Elliott Advisors, a prominent investment firm. Elliott Advisors submitted bids valuing the retail chain at £700 million and £757 million, respectively. However, Currys’ board of directors rejected these offers, deeming them too low and undervaluing the company’s future potential.

Furthermore, JD.com, the Chinese e-commerce giant, also explored the possibility of making a bid for Currys but ultimately decided against pursuing any formal proposals.

Expert Commentary

Russ Mould, investment director at AJ Bell, offered insights into Currys’ performance and its rejection of takeover bids. He commented, ‘When a company rejects a bid based on valuation concerns, the onus is on management to substantiate those claims.’

Mould added, ‘Their latest trading update provides further evidence that the 62p per share bid [from Elliott] was indeed undervalued. The shares have achieved double-digit growth despite overall market weakness.’

Historical Context and Evolution of Currys

Originally established in 1884 as a bicycle manufacturer, Currys later diversified its product range to include radios, toys, and gramophones. In a significant corporate event, Dixons Retail acquired Currys exactly one century after its founding. Stanley Kalms, the former long-serving head of Dixons, who recently passed away at the age of 93, played a pivotal role in transforming Dixons from a single camera shop in North London into Britain’s largest consumer electronics retailer.

Under Kalms’ leadership, Dixons expanded its offerings to encompass a wide array of products, from digital cameras to mobile phones, hi-fi systems, and gaming consoles. The group also pioneered Freeserve, one of the UK’s earliest internet service providers, which was subsequently sold to Wanadoo for £1.6 billion in 2000.

Kalms served as chairman of Dixons until 2002 and continued as president until 2014, marking a long and influential tenure. In 2014, Dixons merged with Carphone Warehouse, a mobile phone retailer, to create Dixons Carphone. The merged entity adopted its current name, Currys, seven years later, completing its evolution in the retail landscape.

Currys’ Unique Position in the Retail Market

AJ Bell’s Mould further noted, ‘Currys stands out as one of the few remaining electronics retailers maintaining a physical presence on the high street. The company leverages this physical footprint to offer personalized assistance to customers navigating increasingly complex consumer technology purchases.’

He also emphasized Currys’ comprehensive service offerings, stating, ‘Currys provides a full spectrum of services, ranging from credit options to delivery, installation, repairs, and recycling programs. These diverse services differentiate Currys and help it distinguish itself in a competitive market.’