UK's Currys sees more profit growth as AI gadgets arrive

By James Davey

LONDON (Reuters) -British electricals retailer Currys, a takeover target earlier this year, forecast AI-powered gadgets would help to deliver another year of profit growth after a 10% rise in 2023-24 that reflected a steady improvement in trading.

The group, which sells fridges, washing machines, tumble driers, televisions, computers and other consumer electricals, said trading in the early part of its new financial year had been in line with its expectations.

"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," CEO Alex Baldock said.

He said AI-powered technology was "the most exciting new product cycle since the tablet in 2010" and Currys was "best-placed to benefit".

Currys made an adjusted profit before tax of 118 million pounds ($149 million) in the year to April 27 - in line with guidance upgraded last month and up from 107 million pounds made in 2022-23.

That was achieved despite a 4% fall in revenue to 8.48 billion pounds, with like-for-like sales down 2% in the UK and Ireland division and down 3% in the Nordics, but improving through the year.

Gross margin was up in both divisions, offsetting the sales decline.

The UK was held back by weakness in demand for discretionary items due to high inflation and rising interest rates.

Average UK wages are, however, now rising faster than inflation and consumer sentiment in June recovered to its highest since November 2021, according to Britain's longest-running consumer confidence survey published last week.

Currys shares, 11% of which are owned by Mike Ashley's Frasers Group, are up 44% year-on-year.

Earlier this year, Currys saw off bid interest from U.S. investor Elliott Advisors and China-based online retailer JD.com. Both had been attracted by Currys' extensive distribution network.

In April, Currys completed the disposal of its Greek business, making proceeds of 156 million pounds.

On Wednesday, rival AO World also said it was confident of profit growth in its current financial year.

($1 = 0.7915 pounds)

(Reporting by James Davey; Editing by Sarah Young and Mark Potter)