Currys shares rose on Monday after increasing profit guidance for the year and conforming neither Elliot nor JD.com had made formal offers, and the allotted time period to do so had now ended.
The group said like-for-like sales in the UK & Ireland and Nordics are positive and increased profit guidance to £115m.
This will be welcome news for investors who now face the prospect of Currys continuing by itself after the two potential bidders pulled out.
“Its two suitors may have walked away, but Currys has started the week with its head a bit higher, by raising its profit forecasts for the year. Shares slid on Friday after the news that JD.Com was joining Elliott Investment Management in backing out of potential takeovers and they made up a small bit of ground in early trading,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“The board was steadfast in its view that the offers priced the company too low, given that it’s partly the current economic climate which is to blame for its lacklustre performance. Today’s figures give a little more weight to their opinion, with the retailer upping pre-tax profit forecasts to at least £115 million, up from the previous range of £105-115 million, but there is clearly more work to be done.”
Currys takeover interest may have been a surprise for market participants given the generally poor conditions for consumers. However, the opportunistic bids will make more and more sense if Currys can build on today’s guidance upgrade.
“Consumer electronics has been a challenging place to be, with shoppers’ spending power under pressure, but with inflation set to fall and interest rate cuts eyed on the horizon, there are hopes that these headwinds are subsiding, amid some signs of ‘encouraging momentum’,” Streeter said.
“There are also bright spots emerging for the group’s services channels which have the potential to make customers more sticky, with Chief Executive Alex Baldock underlining that the group was selling more solutions and services that boost margins.”
Currys shares were 3.45% higher at 58.5p at the time of writing.