Currys loads up £50m share buyback as sales and profitability improve

Currys PLC announced a new £50 million share buyback program following a strong first-quarter trading update, reporting a 3% increase in like-for-like sales and improved profitability across all markets driven by a focus on higher-margin categories and stringent cost control. The company also significantly reduced its pension deficit to £134 million and anticipates total cash returns to shareholders of approximately £75 million this year, underpinned by a robust net cash position and management confidence in achieving full-year consensus forecasts.

Analysis

Currys PLC has demonstrated a significant operational and financial turnaround in its first-quarter update, underpinned by a new £50 million share buyback. The company reported an acceleration in group like-for-like sales growth to 3%, surpassing the 2% rate from the previous full year, with positive contributions from both the UK & Ireland (+3%) and the Nordics (+2%). This growth is strategically driven by a successful pivot towards higher-margin categories such as AI computing, gaming, and services, which has effectively offset declines in traditional products like TVs and tablets. A critical development is the dramatic improvement in the company's balance sheet, evidenced by the reduction of its pension deficit to £134 million from £403 million, which will slash annual cash contributions from £78 million to just £13 million from FY26/27. This structural enhancement to free cash flow supports the announced £75 million in total shareholder returns for the year while maintaining a forecast year-end net cash position of at least £100 million, reinforcing management's confidence in meeting full-year consensus forecasts.

Key Decisions for Investors

• The combination of accelerating sales, margin improvement, and a significant £75 million capital return program suggests a positive inflection point, justifying a re-evaluation of the stock's valuation multiples.
• Investors should factor the material long-term enhancement to free cash flow from the sharply reduced pension contributions, as this fundamentally improves the company's capacity for future shareholder returns and strategic investments.
• Monitor the performance of the services division, particularly the 22% growth in iD Mobile subscribers, as this recurring revenue stream provides a valuable and growing source of stability against the cyclicality of consumer electronics retail.
• While the outlook is strong, investors should remain attentive to the pace of the Nordics profitability recovery and the company's ability to continue managing the product mix-shift towards higher-margin categories to sustain its current momentum.