Currys raises its profit forecast for the second time this year

Currys on Monday upgraded its annual profit outlook after better-than-expected trading over the past two months.

The electronics retailer now expects to report adjusted pre-tax profit of at least £115 million for the current financial year, up from a previous forecast of £105 million to £115 million.

This is the second time this year that the London group has raised its profit forecast, having done so in mid-January despite a slight decline in sales during the peak holiday period, which covered the ten weeks ending January 6.

Currys also announced that the period for reviewing acquisition offers had ended after Chinese online shopping giant JD.com said on Friday it would not make any formal proposals.

Four days earlier, private equity giant Elliot Advisers abandoned its pursuit of the retailer after Currys bosses rejected two takeover offers from the owner of the Waterstones bookstore chain.

Since the festive period, the company has recorded “positive” sales and “robust” gross margins in its British Isles and Nordic divisions, as well as healthy growth in its services arm.

Additionally, the FTSE 250 group announced that the sale of its Greek and Cypriot operations, Kotsovolos, is expected to take place in the first half of April.

Currys agreed last November to sell the division for £175 million to Public Power Corporation, Greece’s largest electricity generation provider, and use the proceeds to pay down debts. It expects to end the year with a net cash position of £97m.

Alex Baldock, managing director of Currys, said: “We have worked to get the Nordic countries back on track while maintaining the encouraging momentum in the UK and Ireland.

“Both are progressing well, despite continued challenging markets, and we are now confident of raising earnings expectations for this year at least above our previous forecasts.”

The two deals, worth around £682m and £750m respectively, were turned down by Currys, which claimed they “significantly undervalued the business and its future prospects “.

One of Currys’ major shareholders, JO Hambro Capital Management UK Equity Income fund, wanted the company to accept an offer of at least £1 billion.

Russ Mould, investment director at AJ Bell, said Currys’ recent trading performance “justifies its decision to fight” the approaches of Elliot and JD.com.

He added: “Investors would have been upset if he had not provided such a strong update, as it would have strengthened the argument for accepting an offer.

“After all, many investors have a very short-term view and judge a company based solely on its quarterly performance.”

Currys shares were 3.45 percent higher at 58.55p on Monday morning, although they have fallen by more than half since the start of 2020.