ii view: Currys pursues Nordic store recovery

First-half results to 28 October

• Revenue down 7% to £4.16 billion
• Adjusted pre-tax loss of £16 million, down from a loss of £17 million in H1 last year
• Net debt up 23% to £129 million
• No dividend payment

Chief executive Alex Baldock commented:“Our priorities this year are simple: to get the Nordics back on track, to keep up the UK&I's encouraging momentum, while strengthening our balance sheet and liquidity. We're making good progress on all these in a still-challenging economic environment.”

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ii round-up:

Currys (LSE:CURY) trades across 815 stores and several websites in eight countries including the UK.  

It trades under the Currys and Mobile iD brand in the UK and Ireland, and Elkjøp in the Nordics. It recently agreed the sale of its Kotsovolos branded business in Greece.  

For a round-up of these latest results announced on 14 December, please click here.

ii view:

Formerly Dixons Carphone, Currys today employs around 28,000 people. Competing against rivals including AO World (LSE:AO.) and John Lewis, its operations include product repair facilities in Newark in the UK, a product sourcing office in Hong Kong, and a wide distribution network for both home and store deliveries. The UK & Ireland generate its biggest slug of sales at around 53%, followed by the Nordics, including Norway, Sweden, Denmark, and Finland at 40%, and Greece at 7%. 

For investors, sales of consumer electronics and computing remain weak across both the UK & Ireland and the Nordics, with such sales for its biggest home market down by almost a quarter over the last two years. The sale of its Greek business reduces geographical diversity. Competitors such as AO World are not standing still, while the dividend remains halted as it looks to strengthen its balance sheet.  

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On the upside, the profit margin for its Nordic business improved, aided by a focus on costs and an increase in online market share. Product sales advice is available in contrast to retail rivals such as Amazon (NASDAQ:AMZN). Annualised cost savings for the retailer of £300 million remain on target, while the sale of its Greek business will help to strengthen finances. 

On balance, and while more cautious investors may wish to await an upturn in profits before adding to any existing shareholdings, a consensus analyst estimate of fair value sat at over 70p per share does appear to offer grounds for longer-term optimism.

Positives

• Focus on costs
• Diverse product/services and geographical footprint

Negatives

• Tough economic backdrop
• Halted dividend payment

The average rating of stock market analysts:

Hold