Currys has raised its annual earnings outlook following stronger-than-anticipated sales across the British Isles.
The electricals retailer, formed from the merger of Dixons Retail and Carphone Warehouse, now forecasts adjusted pre-tax profits of between £110million and £120million for the 12 months ending 29 April.
In March, the company reduced its full-year profit guidance to approximately £104million because of difficult trading conditions across the Nordic countries.
Outlook: Electricals retailer Currys now forecasts adjusted pre-tax profits of between £110million and £120million for the 12 months ending 29 April
Though it acknowledged today the consumer backdrop in the region remained challenging, the firm said progress was being made towards getting rid of £25million in annual costs.
Currys saw better-than-expected performance in the UK and Ireland, particularly in the latter two months of the fiscal year, and now expects underlying profits in the territory to have expanded by more than 40 per cent.
The London-based retailer also reported net debts ended April at about £100million, which is towards the bottom end of its prior forecast of up to £150million.
Currys shares jumped 5.45 per cent to 59p on Monday morning, making them the top riser on the FTSE 350 Index.
However, they have still declined by around 58 per cent in the past two years.
The firm’s new earnings outlook remains significantly lower than the £186million made last year when it benefited from a resurgence in store purchases and drastic cost-cutting measures.
Currys warned last summer that profits would be lower going forward as the cost-of-living crisis forced consumers to cut back on non-essential goods.
In addition, its Scandinavian business was weighed down with surplus inventory after keeping prices the same while demand for goods slowed and rivals engaged in hefty discounting.
Russ Mould, investment director at AJ Bell, said: ‘For a long time, the Nordics arm just quietly did the business for Currys, serving an affluent customer base, but what initially seemed to be a short-term problem of competitors selling off excess stock at a discount has become a lingering issue.’
Amidst this turmoil, Erik Sønsterud stepped down as the firm’s chief executive in the region in March, with chief operating officer Fredrik Tønnesen replacing him.
Online sales of electrical products soared during the early stages of the Covid-19 pandemic as lockdown restrictions and the growth in people working from home led people to buy more laptops, televisions and other home appliances.
Currys’ like-for-like sales have fallen in each of the past two financial years since those curbs began to be lifted, including by 7 per cent last year.
‘While the electrical retailer’s profit upgrade is a welcome development, it is still toughing it out in a difficult environment for retailers,’ remarked Adam Vettese, an analyst at trading platform eToro.
