Currys Shares Soar 9% As FY Profits Top Expectations

Currys shares surged 9.4% after the electricals retailer reported full-year adjusted profit before tax up 37% to £162 million, beating forecasts, driven by strong UK & Ireland performance and effective cost-cutting. The company also resumed its dividend, signaling a strengthening financial position and a successful strategic pivot towards higher-margin services and recurring revenues. While the outlook for FY226 projects continued profit growth to £167 million, management acknowledges headwinds including rising labor costs, general inflation, and currency impacts, with analysts noting potential challenges from broader consumer spending weakness.

Analysis

Currys has demonstrated a significant operational turnaround, beating profit forecasts and triggering a 9.4% rise in its share price. The company's adjusted profit before tax surged 37% to £162 million on a 3% increase in group revenue, driven primarily by robust performance in its core UK and Ireland division, where like-for-like sales grew 4%. This strength is attributed to a successful strategic pivot towards higher-margin, recurring revenue streams, evidenced by a 12% increase in Services revenues and a 26% rise in iD Mobile subscribers. The financial position has markedly improved, with free cash flow growing 82% to £149 million and the year-end net cash position doubling to £184 million. This strength enabled the reinstatement of a dividend, signaling management's confidence in the business's momentum and future cash generation. However, the outlook is tempered with caution; while FY2026 adjusted pre-tax profit is guided to grow modestly to £167 million, the company explicitly cited headwinds from rising UK labor costs, general inflation, and a weaker Norwegian Kroner, a sentiment echoed by analysts who warn that future progress may be challenged by a potential slowdown in UK consumer spending.

Key Decisions for Investors

• The successful pivot to higher-margin services, strong free cash flow generation, and the resumption of dividends signal a significant operational turnaround, warranting a re-evaluation of the company's long-term earnings quality and resilience.
• Investors must closely monitor the acknowledged headwinds of UK labor costs, general inflation, and currency weakness, as these could pressure margins and challenge the modest profit growth guided for the upcoming year.
• Key performance indicators to watch are continued growth in UK & Ireland services revenue and iD Mobile subscribers, as these metrics will validate the sustainability of the new business model against potential softness in the Nordics and broader consumer spending.