Currys pins hopes on AI-tech as FY earnings jump 10%
By Frank Prenesti
Date: Thursday 27 Jun 2024
(Sharecast News) - UK electricals retailer Currys said trading in the current fiscal year was in line with expectations after 2023/24 adjusted earnings rose 10% and was pinning its hopes on the increasing use of artificial intelligence in electronic goods.
The company, which sells everything from laptops to fridges, on Thursday said adjusted pre-tax profit of £118m, up from the £107m reported in in 2022/23. Revenue fell 4% to £8.48bn as the cost-of-living crisis continued to weigh on discretionary spending.
"We're planning prudently but confidently for the year ahead, on course to grow both profits and cashflow while carefully stepping back up to more normal investment levels," said chief executive Alex Baldock.
"Encouraged as we are by our progress, we know we can go further. For one thing, we expect artificial intelligence-powered technology to be the most exciting new product cycle since the tablet in 2010. With our partnerships, scale and expert colleagues to demystify AI, we're best-placed to benefit.
In the Nordics, consumer demand remained weak as inflation and interest rate rises impacted consumer confidence and drove a market decline of 3%. However, Currys grew market share and more than doubled profits, despite a headwind from currency translation.
UK & Ireland like-for-like sales fell 2%, with market share falling as the company continued to focus on more profitable sales which helped drive the rise in earnings.
The company in February this year rejected multiple approaches from the US investment group Elliott, which ultimately walked away from its final £742m offer after the Currys board said it "significantly undervalued the company and its future prospects".
Guy Lawson-Johns, equity analyst at Hargreaves Lansdown, said consumers had struggled to justify upgrading appliances, with demand for small electrical goods particularly affected, but an increase in UK consumer confidence, driven by rising economic optimism, suggested a recovery in discretionary spending "may be underway".
"Even a partial return to the longer-term growth trends Currys previously experienced could significantly benefit the group," he added.
"Importantly the Nordics have also shown some signs of life, sharing in the group's underlying profit growth. But while margins have improved, prolonged weakness in consumer demand will be on everyone's mind. A continued improvement will need to be seen to before management can say the recovery job is done."
Reporting by Frank Prenesti for Sharecast.com
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