ii view: electrical retailer Currys excited by AI powered tech

Full-year results to 27 April

• Revenue down 4% to £8.5 billion
• Adjusted pre-tax profit up 10% to £118 million
• Net cash of £96 million, up from net debt of £97 million 
• No dividend

Guidance:

• Expects profit and free cash flow growth for the year ahead
• Intention to restart shareholder returns during the next 12 months

Chief Executive Alex Baldock commented:

"Our performance continues to strengthen. We've kept up our encouraging momentum in the UK&I, our Nordics business is getting back on track, and we're stronger financially.  
“Encouraged as we are by our progress, we know we can go further. For one thing, we expect AI-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.”

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ii round-up:

Currys (LSE:CURY)s trades across 719 stores and several websites in six countries including the UK.  

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

For a round-up of these latest results announced on 27 June, please click here.

ii view:

Tracing its history back to 1937, Currys today employs around 24,000 people. Along with its stores, operations include Europe's largest technology repair facility in the UK, a product sourcing office in Hong Kong, as well as a wide distribution network for both home and store product deliveries. The UK & Ireland generated 70% of adjusted profits during this latest financial year, with the Nordics the balance. 

For investors, pressured consumer spending given heightened borrowing and rental costs cannot be forgotten. Slow housing market transactions are likely hindering demand for items such as kitchen white goods. The sale of its Greek business reduces geographical diversity, rivals such as AO World (LSE:AO.) are competing hard, while the dividend payment remains suspended.

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To the upside, a recovery at its Nordic business continues, increased customer demand for services such as repair is benefiting profits and a store portfolio offers consumers the opportunity to test products before buying. A new product cycle driven by AI-powered technology could also help boost sales, while returning to a net cash position is likely to provide room for a resumption of dividend payments. 

For now, and given both previously rejected takeover interest and a consensus analyst fair value estimate above 90p per share, grounds for longer-term optimism appear to be firming. 

Positives

• Focus on costs
• Net cash held

Negatives

• Tough economic backdrop
• Suspended dividend payment

The average rating of stock market analysts:

Buy