- Greek disposal to shore up balance sheet
- Tough competition in the Nordics
Cost-conscious consumers have helped to boost full-year profit estimates at Curry’s (CURY) despite falling like-for-like revenue over the Christmas trading period. Sales of mobile devices offset ongoing weakness in TV and computing – but it was a strong performance from the services division that looks to have driven the upgrade.
Persistent cost of living pressures have dampened demand for big-ticket electronic items in recent quarters. It appears that consumers who still want to make these sorts of purchases are increasingly reliant on debt. Currys reported record adoption of its credit offering across the 10 weeks to 6 January, with almost 21 per cent of customers financing their purchases this way.
Uptake of Curry’s iD mobile service, which provides affordable phone contracts and SIM cards, was up 29 per cent year on year. Competition in the Nordic markets remains tough, according to the group, although its gross margin is improving thanks to growing sales of higher-margin products. All told, like-for-like sales were down 2 per cent in the region – better than the fall of 3 per cent seen in the UK and Ireland.
The company is also due to sell off Greek electronics company Kotsovolos in the coming months, which should bring in £156mn of net cash. The board intends to use the proceeds to reduce the company’s debt position. It estimates that its full-year adjusted pre-tax profit figure will be somewhere in the range of £105mn to £115mn, a substantial improvement on current consensus of £104mn.
While we think the expansion of services will help to reassure investors in the short term, the group will still have to grow sales of its core electronics products in the long run. If and when it will be able to do that is uncertain.
Last IC view: Hold, 50p, 14 December 2023
