Currys expects annual profits to surpass forecasts despite a dip in sales over the festive period as cost-cutting measures help bolster its margins.
The electronics retailer anticipates adjusted pre-tax profits of between £105million and £115million for the current financial year, compared to consensus forecasts of £104milllion.
Currys shares climbed 7.7 per cent to 49p by early Thursday afternoon, making them the second-best performer on the FTSE 250.
Expectations: Currys anticipates adjusted pre-tax profits of between £105million and £115million for the current financial year, compared to consensus forecasts of £104milllion
For the ten weeks ending 6 January, which covers the Christmas and Black Friday seasons, Currys’ like-for-like revenue declined by 3 per cent following weaker demand across all markets.
Trading in the British Isles was hit by lower television and computing sales offsetting growth in mobile-related deals, with the number of iD Mobile subscribers jumping 29 per cent to 1.6 million.
Credit adoption grew to a record high as more than a fifth of Curry’s UK and Ireland customers borrowed money to finance their purchase, including through monthly instalment payments or ‘tech now, pay later’ offers.
Currys was further impacted by sluggish TV sales in the Nordic area, as well as falling turnover in countries like Finland.
Yet the firm said the region’s sales trends improved from the first half, while gross margins rose ‘strongly’ thanks to a ‘better balance of sales and margin’.
Alex Baldock, chief executive of Currys, said: ‘We’ve had a successful peak trading period, for customers who are more satisfied than ever, and for profits and cash flow.
‘Our markets may be no easier, but we now expect full-year profits to be above consensus expectations.’
Currys’s trading update comes as the company prepares to finalise the disposal of its Greek and Cypriot business, which is set to happen during the first quarter of this year.
The London-based firm agreed in early November to sell Kotsovolos for €200million (£175million) to Public Power Corporation, Greece’s largest power generation supplier.
It plans to use proceeds from the sale towards cutting debts in the short term but also said the move would create ‘greater flexibility’ to pursue investment and boost investor returns.
Currys decided to offload Kotsovolos after a strategic review determined that the brand’s strength, dominant market position, and profitability were not demonstrated in the group’s valuation.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: ‘Focus now turns to the remaining regions, where there’s been little in the way of positives. Currys’ service channels remain about the only bright light.
‘And because these services are typically higher margin than goods sales, they’re helping to take some of the pressure off the group’s declining revenues and keep full-year margin and profit targets afloat.’
