Currys – Stand Back, Watch And Wait

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Currys – Stand Back, Watch And Wait

Both professional and private investors are likely to be asking whether there will be an AGM Update by the £590m capitalised Currys (LON:CURY) on Thursday of this week?

In fact, it could even be in question whether either Chairman Ian Dyson or Chief Executive Alex Baldock will even make any comment at all to the group’s shareholders.

That might be a disappointment to all concerned, including Mike Ashley, whose Frasers Group has been steadily amassing a holding of some 125.4m shares in the group, representing around 11.06% of its equity.

Currys is a leading omnichannel retailer of technology products and services, operating online and through 823 stores in 8 countries.

In the UK & Ireland it trades as Currys; in the Nordics it trades under the Elkjøp brand and as Kotsovolos in Greece, in each of those markets it is the market leader.

The Latest Finals

The group did not have too good a year’s trading in the year to end April 2023, severely let down by its Nordic stores division.

It reported revenues down from £10,144m to £9,511m, while its adjusted pre-tax profits fell from £192m to just £119m, slashing earnings to 8.3p (12.4p) per share.

So, Should We Follow The ‘Insiders’?

Just six months ago the group’s shares were trading at 82.35p.

Following the finals being reported on 6th July, they were down to 45.38p.

Within days Ashley had upped his group’s stake to the current 11.06%.

What is also worthy of note was that Bruce Marsh, the group’s Financial Director, bought 65,000 more shares @ 46.69p each, while Chairman Ian Dyson paid 47.56p for a further 150,000 shares.

A couple of days later Adam Walker, a Non-Executive Director purchased 102,635 shares @ 48.72p each.

Less than three weeks ago Magdalena Gerger, another Non-Executive Director, paid 51.1p for an additional 10,537 shares.

Broker’s View – The Shares Are A Buy, Looking For 135p

Analyst Adam Tomlinson at Liberum Capital is estimating that the current year to end April 2024 will see sales lower again at £9,422m, with pre-tax profits easing slightly to £111m (£119m), taking earnings down to 7.3p (8.3p) per share.

For the next year he sees £9,722m revenues, £140m profits and 9.2p per share in earnings.

He has put out a Target Price of 135p on the group’s shares and rates them as a Buy.

My View – Stand Back, Watch And Wait

We already know that trading at the start of the year had been consistent with the Board’s expectations.

But just what is reported later this week is anybody’s guess, especially with retail markets continuing to be very tight.

The continuing presence of Frasers Group in the company’s equity is what gives the shares some spice, they closed last night at around the 50.25p level.

Until we know more from this week’s AGM and, hopefully, its AGM Trading Update, it is best to just stand back, watch and wait for subsequent reactions and then assess just where the shares rested in reaction.

Like the Liberum Capital analyst called I do believe that the shares are a Buy, taking a patient view, especially with Ashley playing a steady amassing game.

(Profile 10.07.23 @ 49p set a Target Price of 61p)

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