Looking forward
The Group has assessed the impact of recent changes to Government policy including the recent budget. The full year aggregated impact is expected to be an incremental cost to the Group of £32m, including:
£9m increase in wages due to National Living Wage increases. This includes the direct impact and the indirect impact of protecting (at least in part) wage differentials. All UK colleagues of the same band are paid the same, so the larger increase in NLW for 18-20 year olds has no impact
£12m increase in National Insurance contributions, of which £4m is due to the increase in the Employer NI rate to 15.0% (from 13.8%) and £8m is due to the decrease in the NI threshold from £9,100 to £5,000
£9m impact from the pass through of these costs from some of our outsource partners
£2m increase from the inflation-based increase in business rate taxes.
Around half of these cost increases were anticipated and there are plans in place to offset their impact. The Group will seek to mitigate the remaining impact as much as possible through further cost saving measures, including process improvement, automation, offshoring, outsourcing and overhead efficiencies. Some price rises are also inevitable.
Despite these unexpected headwinds, the Group expects the P&L to benefit from lower interest costs, and is continuing to target at least 3% adjusted EBIT margin.
Alongside this, the Group will remain focused on free cash flow generation. The Group expects to keep annual capital expenditure below £100m, for exceptional cash costs to fall and to be below £10m by 2026/27, and to keep working capital at least neutral despite continued growth of the Mobile business.
The next triennial pension valuation date is March 2025 and the current IAS 19 deficit of £143m compares to scheduled contributions of £277m across 2025/26 to 2028/29. The contributions will cease when the deficit reaches zero on a prudent technical basis and the Group is continuing to work proactively with the scheme trustees to maximise value for all stakeholders.
As we announced on 27 June 2024, providing trading continues to be in line with expectations, the strengthened balance sheet and the improving cashflow dynamics underpin the Board’s intention to announce a recommencement of shareholder returns no later than the full year results on 3 July 2025.
In the reporting of financial information, the Group uses certain measures that are not required under IFRS. These are presented in accordance with the Guidelines on APMs issued by the European Securities and Markets Authority (‘ESMA’) and are consistent with those used internally by the Group’s Chief Operating Decision Maker to evaluate trends, monitor performance, and forecast results. These APMs may not be directly comparable with other similarly titled measures of ‘adjusted’ or ‘underlying’ revenue or profit measures used by other companies, including those within our industry, and are not intended to be a substitute for, or superior to, IFRS measures. Further information and definitions can be found in the Notes to the Financial Information of this report.
Unless otherwise stated, 2023/24 figures have been restated throughout this report to exclude discontinued operations.
We Help Everyone Enjoy Amazing Technology
Chief Executive’s Review
The first half of the year saw our performance continuing its upward trajectory with significantly improved cashflow driven by a >50% adjusted EBIT improvement in both Nordics and UK&I.
In the Nordics, we controlled what we can control. The consumer demand environment remains weak but we grew market share, improved gross margin and kept costs under tight control. The business is well invested and is expected to generate materially improved cashflow this year.
In the UK&I, we stabilised (and slightly grew) our market share, and saw strong performance from Mobile and our B2B business that further boosted growth. Gross margin continued to climb, growing +10bps YoY. Operating costs reduced as a proportion of sales as cost increases were more than offset by operating leverage.
This progress continues to be built on our long-term strategy.
Our strategy starts with “capable and committed colleagues”, as it is difficult in a business like ours for the customer experience to exceed that of the colleague. We have supported colleagues with better tools, training and reward, while fostering a collaborative culture of success. In the Nordics we launched our new values “We win together, play together, grow together and are proud to be different together” to a very warm reception from colleagues. Our latest colleague engagement survey saw 78% participation across the Group and saw us maintain a score of 80, which places us firmly in the top 10% of global companies2.
Next, we want to provide an “easy to shop” experience for our customers. We saw some notable improvements to both of our channels. In the UK, we re-engineered more than 80 stores, to dedicate more space to categories that are more profitable, and to allow more room for expansion into new categories. We also added electronic shelf edge labelling (ESEL) to 60 UK stores. This is an innovation that has been successful in the Nordics and creates a better customer experience, allows more nimble pricing and saves colleagues’ time. We expect to re-engineer a further 33 stores and add ESEL to 40 stores in the second half of the year. Our largest online site, currys.co.uk, which receives over 250m visits per year, has seen over 60 changes that are designed to improve the shopping journey, from easier navigation, searching and filtering, through to an easier checkout, where we now accept all payment types including Apple Pay and Google Pay digital wallets. We have improved the online journey for order & collect, which alongside better store processes has seen order & collect sales grow +15% YoY (and +55% Yo2Y), to over 27% of our online revenue.
To fulfil this easy to shop experience, we continually improve our already excellent logistics network. In October, the long-term investment in our new Nordics distribution centre started to pay back, as the facility became fully operational. Adding 91,000m2 of new capacity allows us to stock kitchens in Jönköping in Sweden instead of Brno in the Czech Republic. This will lead to better lead times and fewer issues for customers, lower costs for the Group and lowers our carbon emissions for kitchens by 75%.
The third leg of our strategy is to create “customers for life” through stickier and more valuable customer relationships. At the heart of this is our unique range of services that help customers afford and enjoy amazing technology to the full, that build us valuable recurring revenue streams, and encourage repeat shopping.
We help customers afford tech through credit, and we have seen UK&I adoption climb +140bps to 21.7%, and active customer accounts grow +15% to over 2.4m. This growth has been helped by launch of Currys flexpay, as well as giving colleagues the tools to sell through credit using their in-store tablets.
We help customers get tech started, through installation and set-up. Our installation services are becoming ever more valued by customers, and 32% of UK big box deliveries now include installation, a rise of +410bps YoY.
Once they have the tech, customers want to keep it working and we give over 12m of them peace of mind through protection plans. As the only tech retailer that operates its own repair facilities, we can offer customers the protection they want at good value. Our circular capabilities enable us to do this efficiently, and during the period over 25% of the parts used in the UK’s central repairs had been previously harvested by our operation.
Finally, we help customers get the most out of their tech, with connectivity being the biggest enabler of this.
Our Mobile business is growing, profitable and cash generative. iD Mobile, our MVNO (Mobile Virtual Network Operator) in the UK, has been the standout performer this year. It has grown +32% YoY to 2.0m subscribers, achieving our year-end target well ahead of plans. The recent CMA ruling on the proposed Vodafone-Three merger provides additional confidence in sustaining our excellent trajectory in Mobile.
Our aim is to continue growing sources of higher margin, recurring revenue such as credit, protection plans and connectivity so that over time our business mixes away from single product purchases to the more predictable, recurring and higher margin revenue streams of solution sales.
Delivering on our strategy helps customers, as seen in higher customer satisfaction and increased market share, and helps us through higher gross margins.
Our gross margins climbed again during the period driven by better bundling of complete solutions, a higher adoption rate of services, continued monetisation of the improved customer experience, discipline on sales stimulation and cost savings.
Our operating costs rose in the UK&I as there was some cost inflation that was not fully offset by savings, we spent more on marketing to drive incremental sales, and we increased investment spend as planned. Over time, a greater proportion of our investment spend has moved into operating rather than capital expenditure, and we evaluate the paybacks and returns generated based on the total spend.
Alongside improved profitability, we have been focussed on cash discipline. Our capital expenditure guidance is £10m lower as we have focussed on executing our plans to maximise returns, and we saw substantial improvements in exceptional expenditure. Our working capital improved despite headwinds of iD Mobile growth and sales decline in the Nordics, as UK&I sales growth and process improvements drove significant working capital inflow. We finished the period with £107m net cash and a pension deficit of £(143)m. This £(36)m net position is by far the strongest balance sheet the Group has had in the decade since the merger.
Overall, we entered our Peak trading period in a robust position with great deals enabled by our strong supplier relationships.
Looking to next year, the UK Government budget is likely to add around £32m of annual cost to our business. We will seek to mitigate as much of this as possible through cost saving measures including process improvement, automation, offshoring, outsourcing and other overhead efficiencies. Some price rises are also inevitable. We will further update on this in due course.
Despite this unwelcome and material headwind, we remain confident. We are the clear #1 brand in all our markets, with a diversified revenue base and a strategy that is working. We remain focussed on generating more free cash flow through improved operating performance, tight working capital management and disciplined capital expenditure to support profitable growth and the long-term success of this business.
Combined with the stronger balance sheet, this will enable resumption and growth of shareholder returns. We will be a business that’s increasingly valuable for shareholders as well as colleagues, customers and society.
2 Colleague engagement survey, Glint October 2024
Results call
There will be a live presentation and audio webcast ***owed by Q&A call for investors and analysts at 9:00am.
The presentation slides will be available via the ***owing link:
BRR Webcasting Platform
To participate in the live audio Q&A session, please use the ***owing participant access details:
UK: +44 (0) 33 0551 0200, please quote ‘Currys Interim Results’ when prompted by the operator
Next scheduled announcement
The Group is scheduled to publish its Peak trading update, covering the 10 weeks to 4 January 2025, on Wednesday 15 January 2025.
For further information
Dan Homan
Investor Relations
+44 (0)7401 400442
Toby Bates
Corporate Communications
+44 (0)7841 037946
Tim Danaher, Sofie Brewis
Brunswick Group
+44 (0)2074 045959
Básicamente hay algunas cosas sugerentes que dicen.
El negocio vuelve a crecer como empresa, ya no decrece, ahora crece. Eso es fundamental. No se cambia el guidance de ingresos ni caja aunque la jugada de Starmer es negativa porque pagan más impuestos. Es decir, esperan que el negocio vaya mejor que lo previsto antes y de esta manera se cubra la subida impositiva del rojo en el gobierno.
UK e Irlanda van como un cohete, recordad que hace dos años ahí tenían un issue importante. Crecen el 6% y se está empezando el ciclo. Se espera un alubión de inversión del retail en portátiles con IA, en electrodomésticos con IA, una explosión brutal del negocio en exclusiva con Microsoft .......... y aprovechar muy bien los más de 800 stores que tienen y les confiere una posición privilegiada en el concepto última milla.
Pero mejor aún que su operador móvil virtual sigue creciendo por encima del 30% y ya tiene 2 millones de clientes. En dos años están en los 3,5 millones de clientes. Este negocio vale una fortuna, va a valer más que toda la empresa en bolsa.
En Nordics subida impresionante del beneficio de explotación aunque viene de un número malo. Lo importante, ya está el problema previo reconducido y el negocio empieza a volar. Se ha decrecido y en ese entorno consiguen mejorar el beneficio. Por supuesto que como en el resto de geografías .......... Nordics va a volver a crecer a doble dígito.
Hablan ya de que tienen la intencion de restaurar el dividendo antes de julio, eso es muy positivo para todos los shareholders. Para dar dividendo es que tienen muy bien la caja y la expectativas.
Es un negocio muy apalancado que ante la mejora operativa ........ se va por encima de 280p rápidamente. Aquí hay muchísimo dinero que ganar. El mercado solo se está fijando en el ciclo, no está mirando que su negocio OMV vale como la empresa capitaliza.
aquí hay una perla
