Investors hope for news to boost under-pressure Currys shares
Shares in Currys are around 35% lower than a year ago.
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Your support makes all the difference.It has been a bad year to be a Currys investor and shareholders will be hoping for chief executive Alex Baldock to pull something out of the hat on Thursday that they can cheer for.
The electronics retailer will update the markets on how it performed in the first half of a year where revenue is expected to fall by nearly half a billion pounds.
The first-half results are traditionally far less important for the company as they cut out in October, before people start shopping for Christmas presents.
But shareholders might be happy to learn of progress on the sale of Currys’ Greek unit. The sale of Kotsovolos will let the business focus on larger markets in the UK, Ireland and the Nordics.
The problem this time was brutal competition on the Nordic markets, where profits collapsed, although the ongoing normalisation in consumer spending on technology and gadgets in the wake of the pandemic posed a further challenge
It also raises £156 million after costs for the business, which might prove important as analysts start eyeing its balance sheet.
The sale came after a trading statement in September which showed that Kotsovolos was the only part of the business which was growing, as total revenue was down 4% year-on-year.
“Mr Baldock and the board responded by putting the Greek unit up for sale, not least because analysts had begun to fret about the balance sheet,” said Russ Mould and Danni Hewson at AJ Bell.
Earlier in the year Currys warned that its Scandinavian business was struggling and the business stopped its dividend.
“The problem this time was brutal competition on the Nordic markets, where profits collapsed, although the ongoing normalisation in consumer spending on technology and gadgets in the wake of the pandemic posed a further challenge,” Mr Mould and Ms Hewson said.
“Profits in the UK and Ireland rose and held relatively firm in Greece.”
There’s no magic wand here, consumers are struggling to justify as much discretionary spending on TVs and gadgets amidst a cost-of-living crisis
Analysts expect revenue to fall from £9.5 billion to £9.0 billion in the full financial year. Pre-tax profit will fall from £119 million last year to £103 million this year if their forecasts are right.
Any sign that the retailer might beat these levels could help its share price. Shares are trading at their lowest point since early 2009 and are down by around 35% in the last year alone.
Hargreaves Lansdown equity analyst Aarin Chiekrie said: “There’s no magic wand here, consumers are struggling to justify as much discretionary spending on TVs and gadgets amidst a cost-of-living crisis.
“Markets are expecting another weak performance in next week’s results. Like-for-like sales in the UK and Ireland look set to drop around 3.5% in the first half, causing underlying operating profits to roughly halve to £13 million.
“Analysts will also be keeping an eye out for any early signs of improvement in the struggling Nordics region, which will be key to a recovery in sentiment and profitability.”