Currys Christmas trading update boosts share price
Electronics retailer Currys reveals its performance during the crucial Christmas trading period, offering insights into UK consumer spending patterns.
Christmas trading performance
Shares in Currys saw an 11% surge following a group-wide Christmas sales increase, raised pre-tax profit forecast and plans to reinstate dividend payments.
Currys has benefitted from the crucial Christmas period which typically accounts for a significant portion of annual sales in the electronics sector.
Financial performance
Sales Growth: The company reported a 2% increase in group-wide like-for-like sales during the Christmas period. The UK and Ireland division mirrored this growth with a 2% rise, while the Nordics division achieved a 1% increase, marking a return to growth after previous challenges.
Profit Outlook: Currys has raised its pre-tax profit forecast for the financial year, now projecting between £145 million and £155 million, surpassing the earlier consensus of £140 million.
Dividend reinstatement
Buoyed by improved financial health, particularly the turnaround in the Nordics division, Currys plans to reinstate dividend payments. Shareholders can anticipate a dividend of 1.3p per share, scheduled for distribution in July.
Operational Strategies:
Cost mitigation: In response to increased operational costs stemming from recent UK government policy changes, including hikes in National Insurance contributions and the National Living Wage, Currys is accelerating automation and offshoring initiatives. These measures aim to counteract an estimated £32 million in additional annual expenses.
Automation efforts: The retailer is implementing electronic pricing labels in approximately 100 UK stores and expanding automation within its logistics and supply chain operations to enhance efficiency.
Offshoring initiatives: Currys currently employs around 1,000 staff in India for administrative and IT functions and plans to increase offshoring to manage rising costs effectively.
Currys technical analysis
Trading signals suggest investors view these improvements as positive with the Currys share price jumping by 11% .
Currys daily candlestick chart
A rise above the 97.30 pence early January high could would put the March 2022 peak at 104.3p on the cards.
Currys weekly candlestick chart
While the November 2024 low at 74.90p underpins, Currys turnaround story and the share price medium-term uptrend, which began in February of last year, remains intact.
Currys omnichannel strategy, services and support offerings
Currys' omnichannel strategy aims to leverage its physical store network while growing online sales as competition from pure-play online retailers continues to pressure traditional brick-and-mortar businesses.
The retailer's services and support offerings provide differentiation from pure online competitors, though.
Cost management and operational efficiency remain key focus areas in the competitive retail environment.
Market context
The company's positive trading update has been well-received by investors, contributing to a notable increase in its share price. Over the past year, Currys' share value has risen by approximately 85%, reflecting growing investor confidence in its strategic direction and financial resilience.
Despite challenges such as increased operational costs due to government policy changes, Currys remains optimistic about its continued recovery and performance in a fluctuating market. The reinstatement of dividends and strategic initiatives to mitigate cost pressures underscore the company's commitment to delivering value to shareholders and maintaining its market position.
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